Portuguese American Journal

OECD: Portuguese workers burdened with the largest income tax increase – Portugal

Portugal, with a tax on wages of 41.1%, was the country of the Organization for Economic Cooperation and Development (OECD) with the largest tax increase in labor income, in 2013, according to a new OECD report released on Friday.

Portugal had a 3.5 percentage point income tax increase, higher than the average increase of 0.2 points in the 34 member countries of the organization, with more than 40 cents in the euro earned on an average Portuguese salary going to paying taxes and social security contributions.

With the total burden of taxes on labor across 34 OECD countries rising to 35.9 percent in 2013, from 35.7 percent in 2012, the increases were largest in Portugal, the Slovak Republic and the United States, the report said.

On several levels, from the average single worker to couples with and without children, the report revealed that the burden on a single average employee rose 0.6 of a percentage point between 2009 and last year.

Accordingly, the highest tax burden for the average single person were in Belgium, at 55.8 per cent, Germany, at 49.3 per cent, and Austria, at 49.1 per cent, while the lowest were in Chile, at 7 per cent, New Zealand, 16.9 per cent, and Mexico, 19.2 per cent.

The tax and social security contribution burden is measured by the tax wedge as a percentage of total labor costs, or the total taxes paid by employees and employers, minus family benefits received, divided by the total labor costs of the employer.

Established in 1960, the Organization for Economic Cooperation and Development (OECD) promotes policies that will improve the economic and social well-being of people around the world. The 34 OECD member countries span the globe, from North and South America to Europe and the Asia-Pacific region.

Read the full OECD report here.


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