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Higher taxes hit individuals more than corporations, says OECD

Higher taxes hit individuals more than corporations, says OECD

The Organisation for Economic Co-operation and Development (OECD) has claimed that individual taxpayers are paying a bigger share of tax than businesses and that changes are needed to get corporations to pay their fair share.

The situation has come about due to the need for governments to fund their financing requirements in the wake of the global economic crisis, according to the OECD.

Annual revenue statistics

The annual revenue statistics report from the OECD has revealed that average revenues from corporate incomes and gains dropped over the 2007-14 period from 3.6% to 2.8% of gross domestic product (GDP).

By contrast, individual income tax revenue increased from 8.8% to 8.9%. VAT revenues also rose over the same period, going up from 6.5% to 6.8%.

Footing the bill

Director of the OECD Centre for Tax Policy and Administration Pascal Saint-Amans said: "Corporate taxpayers continue finding ways to pay less, while individuals end up footing the bill."

Across OECD countries, the average tax burden went up to 34.4% of GDP in 2014, an increase from 2009's figure of 32.7% in 2009 and representing the highest on record.

"The great majority of all tax rises seen since the crisis have fallen on individuals through higher social security contributions, value added taxes and income taxes. This underlines the urgency of efforts to ensure that corporations pay their fair share," Saint-Amans explained.

The highest tax-to-GDP ratio out of all the OECD countries is Denmark, at 50.9% in 2014. France and Belgium were second and third, with 45.2% and 44.7% respectively, whilst the ratio in the UK stands at 32.6%.

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