The level of taxation in the economy indicates the resources available to governments to finance public services or invest in infrastructure. It also provides an approximate assessment of the burden on the economy of the tax system.
The Tax-to-GDP ratio is a key indicator of the analysis of the level of taxation in the economy. It points to the scale of tax revenue in relation to the underlying economy that generates revenue and allows for comparison of the development of economies in different countries. The tax-GDP ratio is therefore a critical starting point for discussion on public finances, tax policy reform and the mobilisation of national resources.
The OECD report concludes that income taxes represent a major part of revenue in 23 countries in 2015 Among them the largest share in 19 countries have PIT, while CIT income is more significant in four countries. Taxes on goods and services are the largest source of tax revenue in 46 countries, including most countries in Africa and Latin America and Latin America
Many different factors influence the level of the tax-GDP ratio. These include economic factors such as the level of income in a given country – countries with higher per capita income usually have higher levels of tax revenue.
Other economic factors, including the level of consumption, openness to trade, the size of sector III or the distribution of the economy by sector, also influence the level of tax/GDP ratio.
For example, countries with a higher share of agriculture tend to record lower tax-to-GDP ratios, while countries with more diverse economies often have higher rates in this respect. Another notable example is the resource-rich countries, which make large profits from the natural resources sector.
They also have low tax-to-GDP ratios due to narrow tax bases. Other national factors affecting the tax-to-GDP ratio relate to the institutional capacity of the country. Weak tax administrations are unable to effectively collect tax revenues and may suffer from institutionalised corruption, tax evasion and leakage of tax revenues.
Finally, geographical location, degree of external debt and foreign aid participation are also important determinants of the tax-GDP relationship.
The OECD presented an overview of tax indicators to GDP in 80 countries, setting levels from 2015. As it turns out in 2015 These relationships ranged from 10.8% to 45.9% In 80 countries included in the database, with significant regional differences and between countries. The tax-to-GDP ratio was higher in OECD countries than in African and Latin American countries.
In countries included in the database Denmark and France had the highest rates of tax on GDP – above 45%. About half of the countries had tax-to-GDP ratios of 20% to 35% In 2015 Tax-GDP ratios above 35% found in one fifth countries in the database. The countries with the lowest tax rates included the Democratic Republic of the Congo, the Dominican Republic, Guatemala, Indonesia, Singapore and Uganda, with tax revenues of less than 15% their GDP.
Differentiated tax-to-GDP ratios were observed in four groups of countries covered by the database of the lowest average in the regions of Africa, Asia and Latin America, and the highest in the OECD countries.
The OECD report concludes that income taxes represent a major part of revenue in 23 countries in 2015 Among them the largest share in 19 countries have PIT, while CIT income is more significant in four countries. Taxes on goods and services are the largest source of tax revenue in 46 countries, including most countries in Africa and Latin America and Latin America.
The report also noted that one fourth countries that come from Africa or the LAC region, with the exception of Japan, recorded a strong increase in most of the most important types of taxation and a large increase (greater than 4.9 p) Tax-to-GDP in years 2000-2015.
Countries with a ratio of GDP in years 2000-2015 fell, mainly in Asia and the OECD zone, often felt a drop in income tax. In some cases, countries experienced changes in the tax structure which were revenue-neutral, which resulted in at least a decrease in one income tax component and an increase in another tax category.
In 61 Countries from all regions can see an increase in VAT levels. An appropriate deviation from the taxation of other goods and services occurs in 37 from these countries.
Correlation analysis confirms previous allegations that countries with higher GDP per capita tend to have a higher Tax-to-GDP ratio, and an initial analysis shows correlations between the level of tax revenue and the structure of tax systems in countries included in the database. In particular, the higher shares of PIT and SSC are positively correlated with higher levels of total taxation, whereas for VAT and CIT revenues the opposite is the case.
The full report is available at: http://www.oecd.org/tax/tax-policy/domestic-revenue-mobilisation-a-new-database-on-tax-levels-and-structures-in-80-countries.pdf