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Finland among highest-tax OECD countries

The tax on labour for a median-income family in Finland was around 37 percent last year, says the OECD.

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EU countries generally have the highest taxes among industrialised nations. Image: Ismo Pekkarinen / AOP

Finland was one of the eight highest-taxing countries among the 36 top industrialised countries last year, according to figures released by the Organisation for Economic Co-operation and Development (OECD) on Thursday.

The tax wedge – the difference between gross income and after-tax income – was larger only in Austria, Belgium, France, Germany, Greece Italy and neighbouring Sweden.

According to the OECD, the tax wedge on a median-income family in Finland was 37.1 percent, compared the highest rate of 45 percent in Belgium.

The highest average tax wedge for single workers without children was also in Belgium: 52.7 percent, well above Finland's 42.3 percent.

The biggest tax wedge on single-income families with two children was France's 39.4 percent, compared to 37.8 percent in Finland. Sweden, Austria, Belgium, Greece, Italy and Turkey were all also over 37 percent. The OECD comparison takes into account social transfers such as Finnish child benefits.

Overall tax burden down incrementally

Income tax rates declined in Finland last year by one tenth of a percentage point, while workers' social security payments rose by 0.43 percentage points and employers' social security payments shrank by 0.62 percentage points. Overall the typical family's tax burden edged down by 0.26 percentage points compared to 2017.

The lowest taxes among OECD countries were levied in Israel, Chile, New Zealand and Switzerland.

The average wedge for families across the OECD was 30.8 percent, down slightly from the year before.

The dip was driven by significant drops in Estonia and the US, due to income tax reforms, as well as in Hungary and Belgium, where employer social security contributions were cut.

Twenty countries joined the OECD in 1961, including the US, the UK, Canada, Sweden and most other Nordic and western European countries. Sixteen more joined later, including Japan in 1964, Finland in 1969 and Lithuania just last year.

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