Workers are paying more tax even though governments have not increased income tax rates because salaries are going up quicker than tax allowances and reliefs, according to economists.
The revelation comes from a detailed report from the Organisation of Economic Cooperation and Development (OECD).
Economists research the Taxing Wages 2015 found workers in 23 countries belonging to the OECD are paying more tax now than in 2010 – but only taxpayers in 12 nations are paying the same or less.
The OECD comprises most of the world’s leading economies, such as the UK, most European Union states, the USA, Canada and Japan.
The report looks at the ‘tax wedge’ which is calculated as the take home pay of workers after taking away labour costs to employers.
Winners and losers
In 2014, the average OECD worker paid 36% of their salary as tax even though none of the OECD member states had increased income tax rates.
The figure was up 0.1% from the previous year.
The highest taxes paid by single, childless workers on average salaries were in:
- Belgium (55.6%)
- Austria (49.4%)
- Germany (49.3%)
- Hungary (49.0%)
The lowest were in:
- Chile (7%)
- New Zealand (17.2%)
- Mexico (19.5%)
- Israel (20.5%).
In Britain, the average worker pays 23.7% of salary in tax, compared to the OECD average of 25.5%.
Take home salaries
The OECD also produces figures for married workers with two children on average wages.
In the UK, the tax burden for these families dropped to 18.7%. The OECD average is 14.8%.
Reversing the figures, the average married British worker takes home 81.3% of their gross pay compared to the OECD average of 85.2%.
Overall, the report disclosed that the overriding factor in rising and falling tax between OECD members was the performance of the economy and employment.
The economies that flourished more than others saw the tax take rise, while others where unemployment fell saw the figure decrease.
The report also focussed on five emerging market economies that are not members of the OECD – Brazil, China, India, Indonesia, and South Africa.
Analysis showed that workers in Brazil and China paid a similar share of their wages in tax as workers in OECD nations.
In India, Indonesia and South Africa, workers tended to pay much less income tax than those in OECD countries, which helps employers remain more competitive than their rivals.