TAXES
Key findings
How successful and sustainable
are tax policies?
are tax policies?
Tax policy scores are weighted composites. A qualitative policy assessment [ 
] contributes one-half of this weighting, with four quantitative measures [ 
] each contributing an additional one-eighth.
Scores and methodology
] contributes one-half of this weighting, with four quantitative measures [ ] each contributing an additional one-eighth. Scores and methodology
TaxesKey findings: Tax policy
Each 
represents an individual country and is positioned on a scale from 1 (lowest) to 10 (best). Position cursor over to see scores for individual countries.
Click country name in list or text for details.
represents an individual country and is positioned on a scale from 1 (lowest) to 10 (best). Position cursor over to see scores for individual countries.Click country name in list or text for details.
Score distribution
9.3
1
9.0
2
9.0
8.8
4
8.8
8.6
6
8.3
7
8.2
8
8.2
8.2
8.2
8.0
12
Countries in the top group typically have equitable tax systems, either with relatively low rates or welfare states highly valued by the population.
Progressive income taxation is an important contributor to equity in many states (Canada, Luxembourg, Netherlands, U.S., New Zealand, Australia). High overall rates in Norway and Iceland are accepted as the basis for welfare state services, while Sweden mixes high income taxes with low corporate rates.
Many states offer relatively low taxes, particularly for businesses, in hopes of boosting economic activity (Switzerland, Luxembourg, Ireland, U.S., UK). Switzerland's federal system allows individual regions to set their own tax levels.
New Zealand's tax system is admirably simple, while Australia's is complex, but sufficient to produce budget surpluses.
Progressive income taxation is an important contributor to equity in many states (Canada, Luxembourg, Netherlands, U.S., New Zealand, Australia). High overall rates in Norway and Iceland are accepted as the basis for welfare state services, while Sweden mixes high income taxes with low corporate rates.
Many states offer relatively low taxes, particularly for businesses, in hopes of boosting economic activity (Switzerland, Luxembourg, Ireland, U.S., UK). Switzerland's federal system allows individual regions to set their own tax levels.
New Zealand's tax system is admirably simple, while Australia's is complex, but sufficient to produce budget surpluses.
7.8
13
7.3
14
7.2
15
7.0
16
6.7
17
6.3
18
6.2
19
5.8
20
5.8
5.7
22
Countries in the middle group typically show either relatively less competitive tax environments, or fail to collect enough revenue to cover costs.
Relatively high tax rates in Portugal and Spain have led to competitive worries. Denmark's income taxes in particular are very high, but the country is still deemed competitive.
The complicated German system has led to reforms, with burdens being shifted from companies to consumers. High income taxes in Austria are slated for reform in coming years.
Several countries (South Korea, Czech Republic, Japan) have maintained low tax levels at the expense of government budgets. Slovakia's uniform 19 percent flat tax has enhanced the country's competitiveness.
Relatively high tax rates in Portugal and Spain have led to competitive worries. Denmark's income taxes in particular are very high, but the country is still deemed competitive.
The complicated German system has led to reforms, with burdens being shifted from companies to consumers. High income taxes in Austria are slated for reform in coming years.
Several countries (South Korea, Czech Republic, Japan) have maintained low tax levels at the expense of government budgets. Slovakia's uniform 19 percent flat tax has enhanced the country's competitiveness.
4.8
23
4.8
4.7
25
4.5
26
4.1
27
3.7
28
3.2
29
2.8
30
Tax systems in most of the bottom-ranking countries are flawed, often with high rates and complicated systems that contribute to tax evasion and black market economic activity.
Tax evasion is a serious problem in Poland, Mexico, France, Turkey, Greece, and Italy. In many of these countries (France, Greece, Italy, Turkey), rates for those who do pay taxes are very high.
Tax burdens are high in Belgium, particularly for individuals. Overall rates are relatively low in Poland and Hungary, but have led to revenue shortfalls. Tax policy has shifted rapidly in Hungary.
Tax evasion is a serious problem in Poland, Mexico, France, Turkey, Greece, and Italy. In many of these countries (France, Greece, Italy, Turkey), rates for those who do pay taxes are very high.
Tax burdens are high in Belgium, particularly for individuals. Overall rates are relatively low in Poland and Hungary, but have led to revenue shortfalls. Tax policy has shifted rapidly in Hungary.
Rationale
Successful taxation policy achieves three goals: equity, competitiveness and the generation of sufficient public revenue.
The list of top SGI performers includes countries with very high and with very low tax rates, showing that the absolute level of tax burden is not necessarily the most important criterion of success.
Tax evasion is a severe problem in the lowest performing countries.
Performance comparison
Use drop-down menus for selections. In all cases, higher scores reflect better performance.
