Tax revenues have reached a plateau

Tax revenues in advanced economies reached a plateau during 2018 with almost no change since 2017 according to the Organisation for Economic Co-operation and Development research. This ends the trend of annual increases in the tax-to-GDP (gross domestic product) ratio seen since the financial crisis.

The 2019 edition of the OECD’s annual Revenue Statistics publication shows that the average tax-to-GDP ratio was 34.3% in 2018 compared to 34.2% in 2017.

Major reforms to personal and corporate taxes in the US prompted a significant drop in tax revenues which fell from 26.8% of GDP in 2017 to 24.3% in 2018. These reforms affected corporate income tax revenues which fell by 0.7 percentage points and personal income tax revenues (a fall of 0.5 percentage points).

Decreases were also seen in 14 other countries led by a 1.6 percentage point drop in Hungary and a 1.4 percentage...