Recession cuts labour taxes

The economic recession has reduced taxes on the workers' earnings in most developed countries, the Paris-based Organisation of Economic Cooperation and Development (OECD) said on Tuesday in a report.

Due to government stimulus packages and guarantee measures after the worst global depression since the Second World War, “average tax and social security burdens on employment incomes fell slightly in 24 out of 30 OECD countries last year,” the OECD reported. According to the OECD's annual Taxing Wages report, New Zealand, which already imposed relatively low taxes on labour incomes, recorded the biggest falls. Turkey and Sweden also recorded big declines.

OECD said last year many countries cut income taxes, some reduced employer social security contributions and others, including Germany, Japan and the United States, recorded lower wage tax due to lower average wages after the economic crisis. Hungary, Greece and France were the highest-tax countries for one-earner married couples with two children earning the average wage. The difference between the total cost of employing a person and their net take-home pay, or “tax wedge,” was 43.7 per cent in Hungary and 41.7 per cent in Greece and France, well above the OECD average level of 26 per cent, the report said.

For single workers, Belgium, Hungary and Germany recorded the highest “tax wedges” at 55.2 per cent, 53.4 per cent and 50.9 per cent, respectively. At the other end of the scale, Mexico, New Zealand and South Korea took only 15.3 per cent, 18.4 per cent and 19.7 per cent, respectively. This scale's average reading for OECD countries was 36.4 per cent. — Xinhua