HIGH energy prices triggered by Russia’s war of aggression against Ukraine prompted governments to reduce excise taxes during 2022, leading to lower tax levels in many countries, according to new OECD analysis.

Revenue Statistics 2023 shows that the average tax-to-GDP ratio in the OECD fell by 0.15 percentage points (p.p.) in 2022, to 34.0%. This was only the third such decline since the Global Financial Crisis in 2008-09: the level fell by 0.6 p.p. in 2017 and by 0.1 p.p. in 2019.

Revenues from excise taxes fell as a share of GDP in 2022 in 34 of the 36 countries for which preliminary data is available, declining in absolute terms in 21 of these. In some countries, notably in Europe, these declines were related to reductions in energy taxes as well as lower demand for energy products. Revenues from value-added tax (VAT) also declined as a share of GDP in 19 countries, in part due to policies to cushion consumers against high prices for energy and food. 

The decline in revenues from excise taxes in 2022 was partly offset by increases in revenues from corporate income taxes (CIT), which rose as a share of GDP in more than three-quarters of OECD countries amid higher corporate profits, especially in the energy and agricultural sectors. CIT revenues in Norway rose by 8.8% of GDP due to exceptional profits in the energy sector.

Overall tax revenues declined as a share of GDP in 21 of the 36 countries in 2022, increased in 14 countries and remained at the same level in one. The largest decline was observed in Denmark (-5.5 p.p., to 41.9%) while the largest increases were seen in Korea (2.2 p.p., to 32.0%) and Norway (1.8 p.p., to 44.3%).