M a r t i n J a r e š

TAX POLICY ANALYSIS –OECD DATA

� Introduction� Revenue Statistics

¡ The Interpretative Guide¡ Definition of taxes¡ Classification of taxes¡ Data, tax-to-GDP ratio

� Taxing Wages� Tax Database� Tax policy studies

2

Contents

� The core work of the OECD in the tax policy area lies in setting standards

� The standards are not binding, the OECD does not have any legislative power to enforce them

� The standards are based on analyses

3

Introduction

� Main tax policy areas:¡ Double taxation ¡ Transfer pricing¡ Harmful tax practices¡ Tax administration¡ Consumption taxes¡ Base erosion and profit shifting

� Tax policy analysis and tax statistics

4

Introduction (2)

� Work on tax policy analysis and tax statistics is carried on by¡ Working Party No. 2 on tax policy analysis and tax statistics¡ Joint Meeting of Tax and Environment Experts

� Regular statistical products¡ Revenue Statistics¡ Taxing Wages¡ Tax Database¡ Environmental Tax Database

� Analysis of tax policy¡ Tax policy studies and Working papers

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Introduction (3)

� The Interpretative Guide defines what is tax� In the OECD classification the term “tax” is confined to

payments which are¡ compulsory¡ unrequited¡ paid to general government

� Data on tax revenues of all member states from 1965� Data on accrual basis

¡ Tax revenue is recorded at the time that the tax liability was created

� Breakdown by type of tax and level of government

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Revenue Statistics

� 1000 Taxes on income, profits and capital gains¡ 1100 Taxes on income, profits and capital gains of individuals¡ 1200 Corporate taxes on income, profits and capital gains

� 2000 Social security contributions� 3000 Taxes on payroll and workforce� 4000 Taxes on property� 5000 Taxes on goods and services

¡ 5100 Taxes on production, sale, transfer, leasing and delivery of goods and rendering of services÷ 5110 General taxes (5111 Value added taxes)÷ 5120 Taxes on specific goods and services (5121 Excises)

¡ 5200 Taxes on use of goods, or on permission to use goods or perform activities÷ 5210 Recurrent taxes (5211, 5212 Paid in respect of motor vehicles)

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Revenue Statistics (2)

� Attribution of tax revenues to levels of government� In general, a tax is attributed to the government unit that

¡ exercises the authority to impose the tax (either as a principal or through the delegated authority of the principal)

¡ has final discretion to set and vary the rate of the tax, and¡ also final discretion over the use of the tax proceeds

� Links:¡ http://www.oecd.org/tax/tax-policy/revenue-statistics.htm¡ https://data.oecd.org/tax/tax-revenue.htm#indicator-chart¡ https://stats.oecd.org/

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Revenue Statistics (3)

� Total tax burden in the Czech Republic has been aroundthe OECD average

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Revenue Statistics (4)

25

30

35

40

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Tax-to-GDP ratio (% of GDP)Czech Republic OECD average

� Czech Republic has higher share of social security contributions and lower share of personal income tax and property taxes

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Revenue Statistics (5)

7,4 6,9

3,3 2,6

0,5 1,9

3,6 2,8

3,88,4

14,79,0

0,7 2,4

0

5

10

15

20

25

30

35

Czech Republic 2016 OECD average 2015

Tax revenue structure (% of GDP)

Other

Social security contributions

Personal income tax

Corporate income tax

Property taxes

Excise duties

General consumption taxes

� Total tax burden in OECD countries, 2016

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Revenue Statistics (6)

0

10

20

30

40

50

60

Denm

ark

Fran

ce

Belg

ium

Finl

and

Swed

en

Italy

Aust

ria

Hung

ary

Net

herla

nds

Gree

ce

Nor

way

Germ

any

Luxe

mbo

urg

Slov

enia

Icel

and

Esto

nia

Port

ugal

Czec

h Re

publ

ic

Pola

nd

Spai

n

Uni

ted

King

dom

Slov

ak R

epub

lic

New

Zea

land

Cana

da

Isra

el

Japa

n*

Latv

ia

Aust

ralia

*

Switz

erla

nd

Kore

a

Uni

ted

Stat

es

Turk

ey

Irela

nd

Chile

Mex

ico

OECD average: 34.2 %

� Provides comparative information on tax burden on labour income of OECD countries.

� Shows information on¡ income tax paid by workers ¡ social security contributions levied on employees and their

employers¡ family benefits paid as cash transfers.

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Taxing Wages

� Not based on actual data but on a model� Inputs:

¡ information on tax and social-benefits legislation¡ average wage

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Taxing Wages (2)

� Results are presented for different household types which differ by¡ income level (in percentage of average wage)¡ household composition (one- and two-earner families, different

number of children)� Link: http://www.oecd.org/ctp/tax-policy/taxing-

wages.htm

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Taxing Wages (3)

� Average and marginal effective tax rates are calculated¡ Average tax rate: Total tax divided by total income¡ Marginal tax rate: Tax from the last currency unit earned divided by

the currency unit

� Example:¡ Tax rate 20%, all taxpayers entitled to a tax credit of 100¡ A person earns 2000¡ Total tax: 2000 times 20% minus 100 = 300¡ Average tax rate: 300 divided by 2000 = 15%¡ Marginal tax rate: 20%

÷ If income increases by 1, tax increases by 0.2

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Taxing Wages (4)

� Comparative information on a range of tax statistics on¡ personal income taxes¡ social security contributions¡ non-tax compulsory payments¡ corporate and capital income taxes¡ taxes on consumption

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Tax Database

� Personal taxes¡ personal income taxes¡ social security contributions paid by

÷ employees÷ employers÷ self-employed

¡ non-tax compulsory payments÷ compulsory payments made to organizations outside the government sector or

because they are not unrequited

¡ measures of tax burden÷ average rate÷ marginal rate÷ tax wedge (income tax, employer and employee social security contributions

and pay roll tax as a percentage of labour costs)

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Tax Database (2)

� Corporate and capital income taxes¡ basic (non-targeted) rates,¡ small business tax rates,¡ corporate income taxes relating to sub-central governments.

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Tax Database (5)

� Taxes on consumption¡ value added tax

÷ tax rates÷ registration thresholds

¡ excise duties on÷ beer,÷ wine,÷ alcoholic beverages,÷ mineral oils,÷ tobacco.

� Link: http://www.oecd.org/ctp/tax-policy/tax-database.htm

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Tax Database (6)

� Since 1999, 24 studies published� Studies deal with specific tax policy topics, e.g.

¡ Corporate Tax Incentives for Foreign Direct Investment¡ Taxation of SMEs¡ Choosing a Broad Base-Low Rate Approach to Taxation¡ Tax Policy Reform and Economic Growth¡ Taxation and Employment¡ The Distributional Effects of Consumption Taxes

� Link: http://www.oecd.org/ctp/tax-policy/tax-policy-studies.htm

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Tax policy studies

� Since 2011, 35 papers published� Link: http://www.oecd-ilibrary.org/taxation/oecd-

taxation-working-papers_22235558

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Taxation working papers

� A project using actual household microdata analysing distribution of VAT across income deciles

� Most countries have more than one VAT rate� Distributional analysis is important when

assessing impacts of reduced VAT rates

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Distributional effects of VAT

� VAT is regressive, i.e. richer households pay lower VAT as a percentage of their income than poorer households because the rich save more

� A reduced VAT rate on necessities which represent a larger share of consumption basket of the poorer households can mitigate the regressivity

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Distributional effects of VAT (2)

� However, the study found that the highest deciles benefit most from reduced VAT rates

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Distributional effects of VAT (3)

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Distributional effects of VAT (4)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

1 2 3 4 5 6 7 8 9 10

Average tax expenditure (in CZK) per household from all reduced rates: income deciles, Czech Republic

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Distributional effects of VAT (5)

Average tax expenditure (in CZK) per household from reduced rates on museums and ZOOs : income deciles, Czech Republic

0

10

20

30

40

50

60

70

80

1 2 3 4 5 6 7 8 9 10

Thank you for your attention.

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