A recent OECD study of tax reform results in most of the 40 member countries and some G20 countries shows that France remains the top country in terms of tax revenue and that, overall, tax cuts for low-income households and businesses continue to deepen.
According to the OECD’s annual report released on Thursday, September 3, 2018, France’s tax revenue accounted for 46.1% of GDP in 2018, a slight decrease compared to 2017, but still higher than the OECD average of 34.3%, placing it at the top of the list of member countries. Italy ranked second with 42.1%, Norway third with 39%, Germany fourth with 38.2% and Spain fifth with 34.4%, all five of which were above the OECD average. The three countries with the lowest tax-to-GDP ratios are Indonesia, Mexico, and Chile. In these three countries, tax revenue as a percentage of GDP ranges between 11% and 20%, with Mexico being the lowest.
In terms of the distribution of taxes, Australia and Denmark rely heavily on income taxes, which account for more than 50% of total tax revenue, while Western and Central European countries rely more on social and employment contributions from corporations, as does France. Developing countries such as Chile and Argentina, for example, rely more heavily on VAT, with a 45% share. Overall, OECD member countries still rely on three main components of taxation: social and employment contributions, personal income tax, and corporate tax, which account for an average of 28.2%, 23.9%, and 8.8% respectively.
According to the OECD, this year’s neo-crowning epidemic has led to economic stagnation and contraction, and corporate taxation has fallen in all countries, with the largest tax cuts in those countries that normally tax corporations the most, and the lowest corporate tax rates in Hungary and Ireland at 9% and 12.5%, respectively. In terms of corporate tax as a percentage of GDP, the top country is Norway with 6% and the lowest is Latvia with only 1%. France is a special case. While the normal corporate tax rate in France can be as high as 31%, corporate tax as a percentage of GDP is only 2.1%, after various complex algorithms and tax breaks.
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