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OECD: Report on tax reforms reflects lower corporate tax rates

OECD: Report on tax reforms

The Organisation for Economic Cooperation and Development (OECD) today released a report describing recent tax reform efforts in various countries.

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The OECD release notes that countries have used recent tax reforms to lower taxes on businesses and individuals, continuing a trend that began a couple of years ago. The OECD report—Tax Policy Reforms 2018—describes the latest tax reforms across 35 OECD members (as well as Argentina, Indonesia, and South Africa), and identifies major tax policy trends and highlights that economic stimulus provided by fiscal policy, including to a large extent through tax policy, has become more significant. 

According to the OECD:

  • Significant tax reform packages were introduced in Argentina, France, Latvia, and the United States, with a focus on supporting investment and some measures designed to enhance fairness. Other countries have introduced tax measures in a more piecemeal fashion. 
  • Across countries, there is a trend toward corporate income tax rate reductions. The average corporate income tax rate across the OECD has dropped from 32.5% in 2000 to 23.9% in 2018. 
  • Common tax reform trends in this year’s report reveal individual (personal) income tax reductions in many countries, primarily to alleviate the tax burden on low and middle-income earners. A common strategy has been to increase earned income tax credits. 
  • Reforms to social security contributions have generally been limited, and these charges will continue to weigh heavily on labour income in many countries. 
  • Value-added tax (VAT) rates stabilised, with South Africa being the only country where the standard VAT rate was raised in 2018. High VAT rates have led many countries to look for alternative ways of raising additional VAT revenues, notably through tax administration and anti-fraud measures. 
  • New excise taxes are being introduced to deter harmful consumption, in addition to continued increases in excise duty rates on tobacco and alcohol with new taxes on sugar-sweetened beverages in Ireland, South Africa, and the United Kingdom, and the introduction of a tax on cannabis in Canada. 
  • Environment-related tax reforms have continued to focus on energy taxes. Tax reforms outside of energy and vehicles (such as taxes on waste, plastic bags or chemicals) have been much less frequent.

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