Danny McCance 6 Dec 2018 12:04pm

UK tax rate rises faster than OECD average

UK tax revenue as a percentage of GDP rose to 33.3% in 2017 up from 32.7% the previous year

This is more than double the average rise for Organisation for Economic Co-operation and Development (OECD) nations. They saw an increase of 0.2% to a record high of 34.2%.

Of the 36 OECD nations 34 provided data for 2017 and the UK was among 19 that saw a rise in the tax-to-GDP ratio.

Tax revenues in these advanced economies increased as taxes on companies and personal consumption make up an increasing proportion of total tax revenues, the OECD said.

VAT revenues are the largest source of consumption taxes across the OECD, at a record high of 6.8% of GDP and an average 20.2% of total tax revenue in 2016.

France has the highest tax-to-GDP at 46.2%, followed closely by Denmark at 46%, and Belgium at 44.6%.

Mexico reported the lowest ratio of 16.2%, far below the next lowest country, fellow South American nation Chile, which recorded a ratio of 20.2%.

Tax-to-GDP is now higher than pre-crisis levels in 21 countries – the UK’s ratio was 32.9% in 2000.

All but eight nations – Canada, Estonia, Hungary, Ireland, Lithuania, Norway, Slovenia and Sweden – have seen a rise since 2009.

In September, the British Chambers of Commerce downgraded their GDP growth forecast from 1.3% to 1.1% for 2018, and lowered their forecast from 1.4% to 1.3% for 2019.