OECD: Revenue Statistics 2018 published

The OECD’s annual publication on Revenue Statistics 2018 was published on 5 December 2018. The statistics show that tax revenues have increased in advanced economies. The report notes that taxes on companies and personal consumption account for an increasing share of total tax revenues.

The OECD average tax-to-GDP ratio rose to 34.2% in 2017, compared to 34.0% in 2016. The OECD average is now higher than at any time before. There was an increase in tax-to-GDP levels in 19 of the 34 OECD countries surveyed. Tax-to-GDP levels are now higher than their pre-crisis levels in 21 of the countries surveyed.

Value-added tax (VAT) revenues continue to be the largest source of consumption tax revenues in the OECD, reaching an all-time high of 6.8% of GDP in 2016. This represents an average of 20.2% of total tax revenue. Following the financial crisis the standard VAT rates stabilised at 19.3% on average in 2014 and have remained at this level since then. Ten of the countries surveyed have a standard VAT rate above 22%.

The relatively high levels of standard VAT rates mean that there is less scope to raise more tax revenue by raising VAT rates. Countries are therefore considering broadening the tax base to increase VAT revenues. The measures implemented or considered include increasing some of the reduced VAT rates, limiting their scope or eliminating VAT exemptions. Measures to collect more of the VAT due include rules in relation to sales by offshore vendors, in line with new OECD standards.

A special feature in the report highlights ongoing convergence across the OECD countries toward higher tax levels, with greater reliance on corporate income tax (CIT), VAT and social security contributions. The increase in the average share of CIT in total tax revenue was driven by increases in revenues from CIT in 23 of the countries surveyed in 2016.