In 2013, the tax burden on work income amounted to 35.9% in OECD countries, an increase of 0.2 points compared to 2012. By comparison, levies on work income in Canada amounted to 31.1%.
The OECD has just published its latest data on taxes on wages. It shows that income tax on individuals has increased in 21 of the 34 OECD countries, while it decreased in 12 and held steady in one. In 2013, tax and social contributions represented 35.9% of work income, an increase of 0.2 percentage points compared to 2012. It’s the third consecutive year that levies have increased in the OECD area while they had decreased between 2007 and 2010. The upward trend is partly explained by the desire by many governments to reduce budget deficits in a context of low economic growth.
Highest increase in Portugal
In 2013, levy increases were the highest in three countries for a variety of reasons: in Portugal where the legal rates were raised, in Slovakia under the effect of the increase in employer’s social security contributions and in the United States where cuts in social security contributions expired. Despite this high increase, the United States remained at a levy rate less than the OECD average at 31.3%. This rate is close to Canada’s which amounted to 31.1%.
Canada in the lower end of the rankings
Canada ranks 26th out of the 34 OECD countries in terms of tax levies, between the United States and Australia. At the top is Belgium, at a rate of 55.8%. Germany, Austria, Hungary and France follow, with rates of around 49%. At the other end of the scale, Chile levies wages the lowest of the OECD at 7%.