The tax measures decided by OECD members and its main partners were “a key element” in helping households and businesses cope with the inflationary surge, writes the OECD in an annual report published on Wednesday.
Marked by the Russian invasion of Ukraine, the year 2022 saw the prices of many raw materials soar, forcing States to act to relieve their economies affected by inflation at its highest “in more than ten years”.
In this context, “tax measures constituted a key element of support measures for households and businesses”, underlines the Organization for Economic Cooperation and Development in its report entitled “tax policy reforms 2023”, in concert with subsidies, financial transfer policies and price capping of certain essential goods.
The most common tax policies have consisted of reducing VAT and excise rates (an indirect tax) on energy products, indexing tax bracket thresholds to inflation, and providing tax rebates and credits. taxes, reports the Paris-based institution which has scrutinized the tax policies carried out in 75 countries.
These measures have increased the budgetary cost: the OECD notes that “although temporary tax reductions are advantageous due to their immediacy and visibility, their often untargeted nature has increased the budgetary cost and affected incentives to reduce consumption energy”, in a context where public debts have been inflated by support plans during the Covid-19 pandemic.
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