Datastream
Tax-to-GDP Ratio: Comparing Tax Systems Around the World
The Briefing
- The tax-to-GDP ratio measures a countryโs tax revenue, relative to the size of its economy (measured by its Gross Domestic Product, or GDP)
- A higher tax-to-GDP ratio means more money is going to government coffers, and in theory, public services like education and infrastructure
- Out of 35 OECD countries, Denmark has the highest tax-to-GDP ratio at 46.3%, while Mexico ranks last at 16.5%
Tax-to-GDP Ratio: Comparing Tax Systems Around the World
Taxes are an important source of revenue for most countries. In fact, taxes provide around 50% or more of government funds in almost every country in the world.
How does each countryโs tax system compare to one another? This question is tricky to answer. Since countries’ populations and economies differ greatly, measuring total tax revenue is not the best way to compare international tax systems.
Instead, using a tax-to-GDP ratio is one of the more useful ways to compare tax systems around the world.
What is the Tax-to-GDP Ratio?
The tax-to-GDP ratio compares a countryโs tax revenue to the size of its economy, which in this case is measured by its GDP.
The higher the ratio, the higher the proportion of money that goes to government coffers. If managed effectively, this can support the long-term health and prosperity of an economy. According to research conducted by the International Monetary Fund, countries should have a tax-to-GDP ratio of at least 12% in order to experience accelerated economic growth.
The countries that are part of the Organisation for Economic Co-operation and Development (OECD) all meet that threshold, with an average tax-to-GDP ratio of 33.8%.
Ranked: The Tax-to-GDP Ratios of OECD countries
The dataset used for this graphic looks at 35 of the 37 OECD countries, since recent data for Australia and Japan was not available.
Rank | Country | Tax Revenue as % of GDP |
---|---|---|
1 | ๐ฉ๐ฐ Denmark | 46.3% |
2 | ๐ซ๐ท France | 45.4% |
3 | ๐ง๐ช Belgium | 42.9% |
4 | ๐ธ๐ช Sweden | 42.9% |
5 | ๐ฆ๐น Austria | 42.4% |
6 | ๐ฎ๐น Italy | 42.4% |
7 | ๐ซ๐ฎ Finland | 42.2% |
8 | ๐ณ๐ด Norway | 39.9% |
9 | ๐ณ๐ฑ Netherlands | 39.3% |
10 | ๐ฑ๐บ Luxembourg | 39.2% |
11 | ๐ฉ๐ช Germany | 38.8% |
12 | ๐ฌ๐ท Greece | 38.7% |
13 | ๐ธ๐ฎ Slovenia | 37.7% |
14 | ๐ฎ๐ธ Iceland | 36.1% |
15 | ๐ญ๐บ Hungary | 35.8% |
16 | ๐ต๐ฑ Poland | 35.4% |
17 | ๐จ๐ฟ Czech Republic | 34.9% |
18 | ๐ต๐น Portugal | 34.8% |
19 | ๐ธ๐ฐ Slovak Republic | 34.7% |
20 | ๐ช๐ธ Spain | 34.6% |
21 | ๐จ๐ฆ Canada | 33.5% |
22 | ๐ช๐ช Estonia | 33.1% |
23 | ๐ฌ๐ง United Kingdom | 33.0% |
24 | ๐ณ๐ฟ New Zealand | 32.3% |
25 | ๐ฑ๐ป Latvia | 31.2% |
26 | ๐ฎ๐ฑ Israel | 30.5% |
27 | ๐ฑ๐น Lithuania | 30.3% |
28 | ๐จ๐ญ Switzerland | 28.5% |
29 | ๐ฐ๐ท South Korea | 27.4% |
30 | ๐บ๐ธ United States | 24.5% |
31 | ๐น๐ท Turkey | 23.1% |
32 | ๐ฎ๐ช Ireland | 22.7% |
33 | ๐จ๐ฑ Chile | 20.7% |
34 | ๐จ๐ด Colombia | 19.7% |
35 | ๐ฒ๐ฝ Mexico | 16.5% |
OECD Average | 33.8% |
At 46.3%, Denmark has the highest ratio on the list. The country puts its relatively high tax revenue to use, particularly when it comes to subsidizing post-secondary educationโin Denmark, university is free for all EU citizens.
On the less-taxed end of the spectrum, the U.S. ranks 30 out of 35, with a ratio of 24.5%โthatโs notably lower than the OECD average of 33.8%. It’s also worth mentioning that the U.S. has one of the highest GDP per capita measures out of all OECD countries.
Where does America’s tax revenue come from? It gains most of its revenue from the personal income tax. In fact, 41% of the countryโs total tax revenue comes from taxes on personal income, as well as individual profits and gainsโfor context, the OECD average is 24%.
With President Biden’s recent announcement to increase corporate taxes and personal investment gains, Americaโs ratio could look a lot different in the near future.
>>Like this? You might find this article interesting, Unequal State Tax Burdens Across America
Where does this data come from?
Source: OECD
Details: This source uses 2019 provisional data to calculate each country’s tax-to-GDP ratio. For more information on methodology, read the full report by clicking here.
Datastream
Can You Calculate Your Daily Carbon Footprint?
Discover how the average person’s carbon footprint impacts the environment and learn how carbon credits can offset your carbon footprint.
The Briefing
- A person’s carbon footprint is substantial, with activities such as food consumption creating as much as 4,500 g of COโ emissions daily.
- By purchasing carbon credits from Carbon Streaming Corporation, you can offset your own emissions and fund positive climate action.
Your Everyday Carbon Footprint
While many large businesses and countries have committed to net-zero goals, it is essential to acknowledge that your everyday activities also contribute to global emissions.
In this graphic, sponsored by Carbon Streaming Corporation, we will explore how the choices we make and the products we use have a profound impact on our carbon footprint.
Carbon Emissions by Activity
Here are some of the daily activities and products of the average person and their carbon footprint, according to Clever Carbon.
Household Activities & Products | CO2 Emissions (g) |
---|---|
๐ก Standard Light Bulb (100 watts, four hours) | 172 g |
๐ฑ Mobile Phone Use (195 minutes per day)* | 189 g |
๐ Washing Machine (0.63 kWh) | 275 g |
๐ฅ Electric Oven (1.56 kWh) | 675 g |
โจ๏ธ Tumble Dryer (2.5 kWh) | 1,000 g |
๐งป Toilet Roll (2 ply) | 1,300 g |
๐ฟ Hot Shower (10 mins) | 2,000 g |
๐ Daily Commute (one hour, by car) | 3,360 g |
๐ฝ๏ธ Average Daily Food Consumption (three meals of 600 calories) | 4,500 g |
*Phone use based on yearly use of 69kg per the source, Reboxed |
Your choice of transportation plays a crucial role in determining your carbon footprint. For instance, a 15 km daily commute to work on public transport generates an average of 1,464 g of COโ emissions. Compared to 3,360 gโtwice the volume for a journey the same length by car.
By opting for more sustainable modes of transport, such as cycling, walking, or public transportation, you can significantly reduce your carbon footprint.
Addressing Your Carbon Footprint
One way to compensate for your emissions is by purchasing high-quality carbon credits.ย
Carbon credits are used to help fund projects that avoid, reduce or remove COโ emissions. This includes nature-based solutions such as reforestation and improved forest management, or technology-based solutions such as the production of biochar and carbon capture and storage (CCS).
While carbon credits offer a potential solution for individuals to help reduce global emissions, public awareness remains a significant challenge. A BCG-Patch survey revealed that only 34% of U.S. consumers are familiar with carbon credits, and only 3% have purchased them in the past.
About Carbon Streaming
By financing the creation or expansion of carbon projects, Carbon Streaming Corporation secures the rights to future carbon credits generated by these sustainable projects. You can then purchase these carbon credits to help fund climate solutions around the world and compensate for your own emissions.ย
Ready to get involved?
>> Learn more about purchasing carbon credits at Carbon Streaming
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