OECD: Tax burden on wages in rich countries up

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IOL economy arrows Filomena Scalise

London - Taxes on wages rose across industrialised countries last year, as governments sought to reduce budget deficits blown out by efforts to tackle years of economic weakness following the financial crash.

The Organisation for Economic Co-operation and Development (OECD), whose members include the world's richest nations, said the total burden of taxes on labour rose to 35.9 percent in 2013 from 35.7 percent in 2012.

The OECD said the growing “tax wedge”, which includes income taxes and the taxes employers pay on wages, was a disincentive to employment creation.

The Paris-based body believes lifting taxes on property and reducing tax breaks on pension saving for the better off, would be less damaging for employment and growth.

However, data across the OECD showed little correlation between employment and taxes on wages.

Belgium had the highest tax burden at 55.8 percent, last year but had an unemployment rate just fractionally above the OECD average.

Germany had the second highest tax burden at 49.3 percent but the fourth lowest unemployment rate, according to data on the OECD website.

OECD statistician Maurice Nettley said the absence of direct correlation was probably due to the fact economies in the group differed so much and many other factors were at play.

However, the tax burden has fallen on one group - since 2007 low paid workers with children have seen their burden drop relative to average and higher earners, the OECD said in its annual “Taxing Wages” survey. - Reuters



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