OECD government tax revenue freeze

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The share of international tax revenue as a percentage of the economy remained stable last year, breaking an annual upward trend in tax revenue since 2009, in the wake of the financial crisis, according to new data from the United Nations. economic cooperation and development.

The average tax-to-GDP ratio in OECD countries was 34.26% in 2018, virtually unchanged from 34.24% in 2017.

The main reason for the tax revenue freeze was a 2.5 percentage point drop in the US tax-to-GDP ratio, following reforms introduced by the Tax Cuts and Jobs Act. The share of tax revenue in annual economic output in the United States is now 24.3%.

In comparison, the estimated equivalent government operating revenue as a percentage of GDP in the Cayman Islands was 19.5% in 2018, up from 18.1% in 2017.

U.S. tax reform lowered the corporate tax rate from 38.9% in 2017 to 25.8% in 2018. It also lowered income tax rates and increased standard deductions and the tax credit. children’s tax.

This resulted in a 0.5 percentage point drop in personal income tax revenue and a 0.7 percentage point drop on the business side. Property tax revenues fell by 1.3 percentage points, due to the one-time repatriation tax on foreign income under the Tax Cuts and Employment Act, which had increased the property tax revenue in 2017, according to the OECD Annual Report on Income Statistics 2019.

An analysis of Fortune 500 companies by the Institute on Taxation and Economic Policy shows that the effective tax rate for 379 profitable companies in the index last year was only 11.3%. In addition, 91 profitable companies paid zero taxes, mainly thanks to a multitude of tax advantages as well as reduced tax rates.

Taxes collected from businesses in the United States fell 22% to $ 262.7 billion in fiscal 2018, from $ 338.5 billion in 2017 and $ 345.6 billion in 2016. France had the highest tax-to-GDP ratio of 46.1% in 2018. Denmark, which had the highest tax-to-GDP ratio among OECD countries from 2002 to 2016, had the second highest ratio in 2018 (44.9%). Meanwhile, Mexico had the lowest ratio of 16.1%.

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