The countries with the biggest tax bills
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A taxing question
Ever wondered how much tax your Government rakes in compared to others around the world? A new survey from the OECD has ranked the 34 countries with the highest tax bills as a percentage of GDP. Note that this isn't the tax paid by individuals, but includes all corporate and state taxes as well.
34: Mexico – 19.5%
The country with the lowest tax bill of all those ranked is Mexico, with an average tax-to-GDP ratio of 19.5%. Latin America's second-largest economy is making significant tax changes to reduce its reliance on oil revenues – which has been bad news for many workers' pockets. For example, over the past two years it has hiked the top income tax bracket to 35% and introduced an 8% junk food tax.
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33: Chile – 19.8%
Next on the list is Chile, where the various taxes make up 19.8% of GDP. That's slightly lower than the country's biggest earner, the export of copper, which makes up 20% of its income.
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32: South Korea – 24.6%
South Korea's tax bill has increased slightly from 24.3% in 2013 to 24.6% in the latest analysis. As an insight into the nation's tax system, companies face corporation tax of up to 24% depending on how much profit they make, while for individuals the highest rate of income tax is 41.8%.
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31: United States – 26%
The US features surprisingly low down on the list, with an average tax rate of 26%. However, the nation's true tax bill might be slightly higher as the country doesn't impose a national VAT on goods and services, instead charging different rates of retail sales taxes.
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30: Switzerland – 26.6%
Despite its reputation as a tax haven, Switzerland still makes 26.6% of its income from this source. Unlike most European countries, the level of tax residents pay depends on where they live as each of the municipalities, or cantons, set their own levels of tax.
29: Australia – 27.5%
Into the 20s now, and next is Australia with a tax-to-GDP ratio of 27.5%. Taxes are currently very much at the forefront of Australian politics as it's an election year. Like many developed nations, it must try and find a way to slash its spending while at the same time avoiding unpopular (and vote-costing) tax hikes.
28: Turkey – 28.7%
Turkey is one of only three countries where the tax take has increased by more than 4% since before the financial crisis struck, according to the OECD. It stood at 28.7% in 2014, compared to 24.1% back in 2007. For Turkish residents, income tax stands between 15% and 35% depending on your earnings, while companies pay a flat 20% rate.
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27: Ireland – 29.9%
Ireland has a reputation for charging relatively high tax rates - on workers that is, not so much for companies. According to The Journal, a worker's top tax rate currently stands at 41%, but this jumps to 52% once you include so-called 'social charges'. Overall, taxes contributed 29.9% of the country's GDP.
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26: Japan – 30.3%
The first country where the tax take exceeds 30% of GDP is Japan. Perhaps the biggest talking point when it comes to taxes is the Government's plans to hike the hated sales tax from 8% to 10% next year. While no tax hike is popular, the International Monetary Fund has urged the country's Government to push through with it if it is to keep its finances in order – at present the nation has a debt mountain that is twice the size of its GDP.
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25: Canada – 30.8%
In Canada, tax revenues make up 30.8% of GDP, according to the OECD report. While residents might feel taxes are high enough already, there are numerous local reports that the Government could be planning surprise hikes – most likely in the form of an increase to Capital Gains Tax.
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24: Slovakia – 31%
In Slovakia, the tax take was 31% of GDP – up from 30.4% in 2013. The increase is significant, as 2014 marked the first full year since the country abandoned a flat tax rate in favour of a tiered system.
23: Israel – 31.1%
According to the OECD, Israel is one of only three countries where the tax-to-GDP ratio was 3% lower than before the financial crash – down from 34.3% to 31.1%. The Israeli tax system was initially based on the UK's, but it has been substantially changed over the years.
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22: Poland – 31.9%
In 22nd on the list is Poland, where the tax take has remained constant at 31.9% for two years in a row. All eyes will be on the 2015 results, however – the country drastically overhauled its corporation tax rules as of January and it will be interesting to see what impact they have.
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21: New Zealand – 32.4%
One of the biggest tax issues facing New Zealand is multinationals legally dodging taxes. The country's politicians say they are currently in talks with the OECD to find a workable solution. As for its tax ratio, that stands at 32.4% – up 1% since 2013.
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20: United Kingdom – 32.6%
In 20th spot is the UK. With a tax-to-GDP ratio of 32.6%, it is the highest placed English-speaking nation on the list. The nation's workers were recently given some good news, as the Government announced plans to raise the threshold at which they start paying tax to £11,500 in April 2017 .
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19: Estonia – 32.9%
Estonia is the second of three countries to have seen its ratio increase by more than 1% in a year – up from 31.8% to 32.9%.
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18: Spain – 33.2%
Next on the list is Spain, where taxes work out to just under a third of its income. The nation has witnessed the sharpest fall of all the OECD nations since the financial crash. Back in 2007 the GDP-to-tax ratio stood at 36.5%.
17: Czech Republic – 33.5%
The Czech Republic saw its tax ratio slide 0.8% during 2014. According to the OECD, this was largely due to a decline in taxes on goods and services.
16: Portugal - 34.4%
In 16th on the list is Portugal. Its tax ratio is 34.4% – the same as the overall average of all OECD nations. The Government recently outlined plans to cut its deficit to 2.6% of GDP. However, central Government in Brussels insisted the target be set at 2.2%, meaning it has to find an extra £697 million. The Government says this will be achieved through indirect tax hikes and insisted there would be no change to income tax or minimum wage.
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15: Greece – 35.9%
With a 1.5% increase, the tax take of Greece jumped more between 2013 and 2014 than most other OECD nations. Very much the focal point of the financial crisis, the ever-changing Greek governments have implemented some hefty tax hikes over the years. In 2015, for example, sales tax on various goods was hiked from 13% to 23% overnight.
14: Germany – 36.1%
Next on the list is Greece's nemesis in the Eurozone, Germany, where the tax ratio to GDP stands at 36.1%. Interestingly, a 2014 study by accountants PwC found a typical high earner in Germany takes home a bigger percentage of their salary after tax than workers in the US, Canada and the UK – all countries that feature lower down on the tax-to-GDP ratio chart.
13: Slovenia – 36.6%
Slovenian workers start paying tax on income at around £6,000, with the rate starting at 16% and rising to 50% for the highest earners. Companies meanwhile pay a flat corporate tax rate of 17%. Overall, the nation's tax take works out to 36.6% of GDP.
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12: Netherlands – 36.7%
In 12th position is the Netherlands, suggesting it one of the more adept nations at collecting taxes. However, its Government is coming under increased pressure to close a tax loophole after it was claimed that Google successfully moved £8.44 billion through the country to Bermuda in 2014, allegedly avoiding income tax on the bulk of its foreign income.
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11: Luxembourg – 37.8%
Luxembourg saw the third largest fall in its tax-to-GDP ratio, from 38.4% to 37.8%. Like Ireland and the Netherlands, Luxembourg has a reputation of being a low tax base for multinational companies. It's looking to firm up laws to ensure firms truly are based there, rather than just registering an address. It's also reportedly offering a carrot to companies in the form of a gradual 3% corporate tax cut.
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10: Hungary – 38.5%
Hungary kicks off the top 10. While the nation's tax ratio only edged up 0.1% in 2014, we could well see a far sharper rise when the 2015 and 2016 figures are released: a government official recently announced bumper tax revenues from all sources – including income and corporation tax – had helped the country report a budget surplus.
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9: Iceland - 38.7%
Iceland saw the second largest tax ratio increase between 2013 and 2014, rising an impressive 2.8% to 38.7%. According to the OECD, this was driven by “higher revenues from taxes on goods and services and taxes on income and profits”.
8: Norway – 39.1%
As you might expect, Scandinavian countries feature heavily in the top 10, with their firm roots in 'social democracy'. However, unlike many of its neighbours, Norway saw its tax take as a percentage of GDP fall over the year. In fact, the 1.4% drop was the biggest on the entire list, caused by a weak take from income and profits. It is also the biggest faller since before the financial crash apart from Spain.
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7: Sweden – 42.7%
Sweden is the first country on the list where taxes make up more than 40% of GDP. While Swedish workers famously pay high rates of tax, it's worth noting that, at 22%, corporate tax in the country is also higher than most others on this list.
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6: Austria – 43%
In sixth place is Austria, which has seen the total percentage of GDP from rise from 42.5% to 43% in the last year. Last year, the country unveiled plans for a dramatic overhaul of its income tax system, which will see the lowest rate slashed from 36.5% to 25%, according to accountants EY.
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5: Italy – 43.6%
Italy's tax ratio stood at 43.6% for the year, but all eyes will be on how the 2015 figures look. Back in 2014, Prime Minister Matteo Renzi pledged a raft of tax cuts in a bid to bolster its ailing economy – and it will be fascinating to see what impact that has had on the nation's tax take.
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4: Finland – 43.9%
Finland made headlines last year when its government revealed it was considering paying every citizen £620 a month and scrapping all other benefits. It would certainly be an audacious plan, but will only work if it doesn't discourage people from working (and therefore contributing some of the taxes to fund the scheme).
3: Belgium – 44.7%
In third on the list is Belgium, which saw its tax ratio remain unchanged for the year at 44.7%, according to the OECD.
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2: France – 45.2%
In 2012, Franch Prime Minister Francois Hollande famously announced a new 75% rate of income tax on the nation's highest earners. Dubbed a supertax, it soon became clear that it wasn't actually bringing in that much more revenue for the Government, and the decision was made to quietly scrap it at the end of 2014. With that in mind, it will be interesting to see whether that has any impact on the nation's tax-to-GDP ratio in 2015.
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1: Denmark – 50.9%
Obviously a Scandinavian nation was going to top the list, but it's still remarkable just how far ahead Denmark's tax take is. At 50.9% it's 5.5% higher than the nation in second place and 7% higher than any of its Scandinavian neighbours. And it seems to be on an upwards trajectory: between 2013 and 2014, Denmark's tax ratio jumped 3.3% – more than any other nation on the list.