The OECD published its annual report on tax revenue, where it ranked Chile as the country with the second highest increase in tax pressure; Specifically, 2.8 points more than the previous year, up to 22.2% of the Gross Domestic Product (GDP).
Chile was the second OECD country where the weight of taxes in relation to wealth rose more in 2021.
Meanwhile, Mexico was among those that decreased the most, in a year in which economies were recovering from the effects of the pandemic.
In its annual report on tax revenue published this Wednesday, the Organization for Economic Cooperation and Development (OECD) ranked Chile as the country with the second highest increase in tax pressure; Specifically, 2.8 points more than the previous year, up to 22.2% of the Gross Domestic Product (GDP).
Only Norway experienced a rise higher than Chile’s, of 3.4 percentage points (propelled, in this case, by the increase in income from oil extraction, up to 44.2%).
Tax pressure
Most of the bloc’s Latin American states also experienced increases in tax pressure, albeit to a lesser extent.
In Costa Rica, the increase was 1.5 percentage points, reaching 24.2%; and in Colombia from 0.7, up to 19.5%.
Mexico, however, in 2021 was among the OECD members in which tax collection decreased the most compared to GDP.
Specifically, it went from 17.8% in 2020 to 16.7%, a fall only surpassed by the decrease registered in Hungary (from 36.1% to 34%).
Mexico, together with Spain, had led the increases in tax pressure in 2020, but it continues as the OECD state where the global tax pressure is lower in relation to GDP, followed by Colombia (19.5%), both very much below the block average (34.1%).
Support post covid recovery
In the vast majority of countries, 24 of the 36 in the OECD for which there are 2021 data (out of a total of 38 in the organization), the tax burden rose as countries recovered from the economic shock induced by the covid-19 pandemic.
So, the mean of the OECD it progressed six tenths in 2021, to stand at 34.1%.
In nominal terms, the 2021 tax burden grew by 12.8% compared to 2020, while OECD GDP improved by 10.5%.
The priority of the members in fiscal policy was to support the economic recovery, stimulating growth and investment, especially in terms of “green economy”.
The document attributes the increase in tax collection, above all, to the “rebound” in revenue from VAT and corporate taxes (they increased 0.5 and 0.4 percentage points respectively), after the covid-19 crisis .
The report also notes that in 2020, the latest year for which disaggregated data is available for all countries, social contributions represented the largest source of tax revenue in the OECD (26.6%), closely followed by tax on income (24.1%) and VAT (20.2%).
The rest of the consumption rates accounted for 11.9%, corporate tax 9% and property taxes 5.7%.