Back in December last year I blogged about how tax hasn’t changed over time, quoting the Mirrlees review:
Despite some predictions to the contrary, countries are not being forced inexorably to tax less in an increasingly globalized and competitive world economy. Between 1975 and 2008, taxes rose as a proportion of national income in virtually every OECD country. On average, the tax take rose from 29.4% to 34.8% of national income. In no OECD country was there a significant fall in the tax take over this period…
Within the total tax take, we might expect that governments would find it more difficult to raise taxes from internationally mobile companies and people. In fact, revenue from corporation taxes has more than held up over the past 40 years—corporate income taxes accounted for 9% of tax revenues across the OECD in 1965, 8% in 1985, and 10% in 2008.
The OECD’s data now runs up to 2010 (with the 2010 figures provisional) and it continues the same trend. When I last blogged, I said it might surprise people that total taxes had not been driven downwards. On reflection, it is perhaps just as surprising, if not more surprising, that the total tax take hasn’t risen either – after all, so much of the rhetoric over the last decade and more in the UK has been about tax rises, stealth taxes and the like.
What particular people say has varied as Chancellors have come and gone and the parties in power have changed, but the overall message from politicians, interest groups and the public has so consistently been about extra taxes and too much tax that you could be forgiven for thinking taxation overall is up.
Yet this is what the figures show the total tax revenue as a percentage of GDP to have been in the UK:
1985 37.0%
1995 34.0%
2000 36.3%
2005 35.7%
2010 35.0%
For some other OECD data that runs counter to widely voiced assumptions, see how employee protection in the UK compares with other countries.
* Mark Pack is Party President and is the editor of Liberal Democrat Newswire.



3 Comments
The problem is more that tax has been going up with growth. You’d hope that a country that is becoming richer would need to take a smaller percentage of GDP in taxation as this occurs.
“Yet this is what the figures show the total tax revenue as a percentage of GDP to have been in the UK”
And the deficit percentage (as a proprtion of GDP) on top of that too please……..
All this shows us is that it has always proven difficult to tax the British electorate at a level greater than the high-thirties as a proportion of GDP.
I would take this further, pointing out that our declining demographic advantage (worse taxpayer to dependency ratio) and declining technological advantage (lower value / lower margin), makes it ever less possible to expect a rate of growth that will permit sustained & substantial deficit spending.
Talking of the Mirlees Review, the following quote seems particularly apt in light of recent events:
“But governments find it difficult to carry out tax policy in a consistent way.
Unlike the economic ideal that we have discussed throughout this volume,
tax policy is created in a political process with much concern for how it plays
on the evening news and ultimately at the ballot box.”
Pasty tax anyone?