Published: 10 July 2008

Tax ratio declined in 2007 despite rapid growth in tax accrual

According to Statistics Finland's revised data, the ratio of taxes and compulsory social security contributions to gross domestic product was 43.0 per cent in 2007. One year earlier, the ratio was 0.5 percentage points higher. The total accrual of taxes and compulsory social security contributions went up by 6.3 per cent from the previous year and stood at EUR 77.2 billion. Nevertherless, the tax ratio declined from the year before as GDP grew by 7.6 per cent in nominal terms. The net tax ratio, i.e. the tax ratio less current and capital transfers and subsidies paid to the private sector, rose by 0.5 percentage points to 22.3 per cent. The explanation to the development in the tax ratio is that the public transfers grew more slowly than GDP and the accrual of taxes and compulsory social security contributions.

The tax revenues of the state and municipalities increased by 6.1 and 7.7 per cent, respectively, from the previous year. The main reason for the growth was a strong increase in the amount of income tax corporations and households paid. The sum of wages and salaries received by households grew as earnings level rose and employment improved. The growth in the taxes paid by corporations was due to the growth in their entrepreneurial income. Entrepreneurial income in national accounts is roughly the same as profit before taxes and dividends in business bookkeeping.

The collected amount of compulsory social security contributions was 5.5 per cent higher than in the year before. The amount of collected employment pension contributions grew by 6.2 per cent. The total accrual of compulsory social security contributions rose to EUR 21.4 billion.

Taxes and compulsory social security contributions by receiving sector

  2000 2001 2002 2003 2004 2005 2006* 2007*
EUR million
Total 62,418 62,334 64,186 64,187 66,191 69,120 72,615 77,225
State 34,310 32,929 34,667 34,824 35,966 37,244 38,378 40,722
- Income and property tax 13,973 12,098 12,676 11,806 12,319 12,749 12,888 14,384
- Value-added tax 10,869 11,118 11,680 12,455 12,949 13,658 14,418 15,000
Municipalities 13,484 13,807 13,773 13,538 13,778 14,330 15,299 16,478
Social security funds 14,486 15,473 15,640 15,721 16,317 17,392 18,762 19,825
European Union 139 127 106 104 130 154 176 200
  Relative to GDP, %
Total 47.2 44.6 44.6 44.0 43.4 43.9 43.5 43.0
State 25.9 23.5 24.1 23.9 23.6 23.7 23.0 22.7
- Income and property tax 10.6 8.6 8.8 8.1 8.1 8.1 7.7 8.0
- Value-added tax 8.2 7.9 8.1 8.5 8.5 8.7 8.6 8.3
Municipalities 10.2 9.9 9.6 9.3 9.0 9.1 9.2 9.2
Social security funds 11.0 11.1 10.9 10.8 10.7 11.1 11.2 11.0
European Union 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

* = preliminary data

Source: Taxes and tax-like payments 2007. Statistics Finland

Inquiries: Mr Asko Kauppinen +358 9 1734 3216, skt.95@stat.fi

Director in charge: Mr Ari Tyrkkö

Tables

Tables in databases


Last updated 10.7.2008

Referencing instructions:

Official Statistics of Finland (OSF): Taxes and tax-like payments [e-publication].
ISSN=2341-6998. 2007. Helsinki: Statistics Finland [referred: 21.8.2019].
Access method: http://www.stat.fi/til/vermak/2007/vermak_2007_2008-07-10_tie_001_en.html