Government tax at record high with France in top spot

Published 07.12.2018 00:00
Updated 07.12.2018 08:00

France overtook Denmark as the most taxed country in 2017 as government tax revenues in developed countries hit a record high, the OECD said, data which may do little to help President Emmanuel Macron placate protesters angered over living costs.

The Organization for Economic Cooperation and Development (OECD) said on Wednesday overall government tax revenue on average reached 34.2 percent of gross domestic product (GDP) last year among 34 developed countries for which the Paris-based body compiled data.

Though up only slightly from 34.0 percent in 2016, the figure was the highest average overall tax take since the international policy forum's records began in 1965, it said.

In France, tax revenues rose to 46.2 percent of GDP, surpassing Denmark, where the ratio fell to 46.0 percent.

France's high tax burden is a source of resentment among voters. A public rebellion dubbed the "yellow vest" movement erupted in mid-November in anger at high fuel taxes and the punishing cost of living. The protests have at times turned violent, in particular in Paris.

Macron's government on Wednesday scrapped further planned increases in fuel tax amid fear of new violence.

Macron decided to "get rid" of the tax planned for next year, an official in the president's office told The Associated Press. Prime Minister Edouard Philippe told lawmakers the tax is no longer included in the 2019 budget.

The OECD said the government tax take rose in 19 member countries last year and fell in 16.

Israel saw the biggest increase - 1.4 percentage points to 32.7 percent of GDP - due to a number of policy changes affecting taxes on income and profit.

The United States saw the second-biggest increase in 2017 - 1.3 percentage points to 27.1 percent of GDP, which the OECD said was partly due to a one-off repatriation of tax on companies' foreign earnings.

Mexico had the lowest overall tax burden at 16.2 percent, the OECD said.

Meanwhile, Finance Minister Bruno Le Maire yesterday said France will tax digital giants at a national level from 2019 if European Union states cannot reach an agreement on a tax on digital revenues for the bloc.

EU finance ministers failed to agree a tax on digital revenues on Tuesday, despite a last minute Franco-German plan to salvage the proposal by narrowing its focus to companies like Google and Facebook.

"I am giving myself until March to reach a deal on a European tax on digital giants," Le Maire told France 2 television.

"If it doesn't work out, we will do it at a national level, from 2019," he added.

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