Tax revenues continue bouncing back from the low levels reported in almost all countries during 2008 and 2009, at the height of the global economic crisis, according to new OECD data in the annual Revenue Statistics publication. The average tax revenue to GDP ratio in OECD countries was 34.6% in 2012, compared with 34.1% in 2011 and 33.8% in 2010.
The ratio of tax revenues to GDP rose in 21 of the 30 countries for which 2012 data is available, and fell in only 9 countries. The number of countries with increasing and decreasing ratios was similar to that seen in 2011, indicating a continuing trend toward higher revenues.
The largest increases in 2012 occurred in Hungary, Greece, Italy and New Zealand. The largest falls were in Israel, Portugal and the United Kingdom.
The increase in tax ratios between 2011 and 2012 is due to a combination of factors. In progressive tax regimes, revenue rises faster than income during periods of real income growth. Discretionary tax changes have also played a role, as many countries raised tax rates and/or broadened tax bases. Discretionary tax changes played a greater role in a handful of European countries where GDP levels actually declined in 2012.
The new data point to rising revenues in central, state and regional governments following the declines in 2008 and 2009, whereas the average tax ratio for local governments has remained steady since 2007.