Executive summary
In 2022, a majority of OECD countries observed a decline in their tax-to-GDP ratio and the average OECD tax-to-GDP ratio declined by 0.15 percentage points (p.p.) to 34.0%. While revenues from corporate income tax (CIT) rose as a share of GDP in over three-quarters of OECD countries in 2022 on the back of higher profits (especially in the energy and agriculture sectors), revenues from excises declined in 34 out of the 36 OECD countries for which preliminary data for 2022 is available as sharp increases in global energy prices led to lower demand and prompted many countries to reduce energy taxes.
In this publication, taxes are defined as compulsory, unrequited payments to the general government or to a supranational authority. They are unrequited in that the benefits provided by governments to taxpayers are not normally allocated in proportion to their payments. Taxes are classified according to their base: income, profits and capital gains; payroll; property; goods and services; and other taxes. Compulsory social security contributions paid to general government are also treated as taxes. Revenues are analysed by level of government: federal or central; state; local; and social security funds. Detailed information on the classification of taxes is set out in the Interpretative Guide in Annex A.
Across OECD countries, tax-to-GDP ratios ranged from 16.9% in Mexico to 46.1% in France in 2022. Between 2021 and 2022, the OECD average tax-to-GDP ratio declined from 34.2% to 34.0%.
In 2022, tax-to-GDP ratios declined from the previous year in 21 of the 36 countries for which preliminary data is available, increased in 14 countries and remained unchanged in one.
Among the 21 countries where the tax-to-GDP ratio declined in 2022, the largest fall was in Denmark (5.5 p.p.), primarily due to a decline in income tax revenues. The Netherlands, Poland, Sweden, Switzerland and Türkiye also recorded declines in their tax-to-GDP ratio larger than 1 p.p.
The largest increase in 2022 was observed in Korea, whose tax-to-GDP ratio rose by 2.2 p.p. due to higher revenues from income taxes and value added tax (VAT). The second-largest increase was in Norway, where tax revenues rose by 1.9 p.p. as a result of exceptional profits in the energy sector. Increases larger than 1.5 p.p. were also observed in Chile and Greece.
Over the longer term, 30 OECD countries reported higher tax-to-GDP ratios in 2022 than in 2010, with the largest increases in Korea and Greece (9.6 p.p. and 8.7 p.p., respectively). Among the remaining eight countries, tax levels in 2022 were more than 6 p.p. lower than in 2010 in Ireland and almost 4 p.p. lower in Türkiye.
In 2021, the latest year for which final tax revenue data is available for all OECD countries, social security contributions accounted for the largest share of tax revenues in the OECD, at just over one-quarter (25.6%), on average, while revenues from personal income tax (PIT) accounted for the second-largest share, at 23.7% of the total. VAT accounted for one-fifth of total revenues (20.7%), with other consumption taxes generating a further 11.2%. CIT accounted for 10.2% of total tax revenues in 2021, with property taxes (5.6%) and residual taxes accounting for the remainder.
Between 2020 and 2021, the average share of income tax revenues (PIT and CIT combined) in total tax revenues increased by 0.8 p.p. to 34.0%, with the share of CIT in total tax revenues increasing over this period while the share of PIT declined. In 2021, the average share of social security contributions in the OECD average tax structure fell by 1.0 p.p. while the share of tax revenues from taxes on goods and services decreased by 0.2 p.p.
On average, subnational governments received a lower share of tax revenues in 2021 than in 2020. The central government’s average share of revenues rose from 52.0% to 53.3% of general government revenue in federal countries and from 62.5% to 63.6% in unitary countries between 2020 and 2021. In federal countries, 17.7% of tax revenues were received at state level and 7.5% at local government level on average in 2021. At state level, the average share of tax revenues ranged from 2.0% in Austria to 39.6% in Canada, while at local government level it ranged from 1.8% in Mexico to 15.3% in Switzerland. In unitary countries, the share of local government revenues was 10.8% on average, ranging from less than 0.7% in Estonia to 35.3% in Sweden.
A special feature in this publication looks at the buoyancy of tax revenues in OECD countries between 1980 and 2021, defined as changes in tax revenues with respect to changes in the tax base (which for this analysis was taken to be GDP). Using the unique Revenue Statistics database, the chapter estimates the short- and long-run buoyancy of total tax revenues and six tax types for all OECD countries: CIT, PIT, social security contributions, VAT, excises and property taxes. By providing insights into the factors behind short- and long-run changes in revenues from different tax types, the chapter aims to inform strategies to stabilise tax revenues over the business cycle and to ensure fiscal sustainability over the longer term. It may also help governments to enhance the resilience of public finances in the event of future shocks.
The special feature finds that, on average across the OECD, revenues from CIT and VAT were more buoyant than revenues from other tax types over the last four decades, while social security contributions and excises were more stable revenue sources during short-term economic fluctuations. Since 1980, long-run buoyancy has increased across the OECD for total tax revenues and for most tax types, with the exceptions of CIT and social security contributions. The chapter also examines how tax buoyancy changes over the business cycle, as well as the impact of inflation and demographic changes on tax buoyancy. The results of this analysis need to be treated with caution, in part because tax buoyancy estimates do not distinguish between the impact of changes in GDP and the impact of discretionary tax policies on tax revenues.