This is the thirteenth edition of Consumption Tax Trends, a biennial OECD publication. It presents cross-country comparative data on consumption taxes in OECD member countries, as at 1 January 2020. Tables using data from the National Accounts and data on tax revenue from Revenue Statistics 2020 are updated up to and including 2018. Price levels for fuel oils are updated as at 4th Quarter 2019 from Energy Prices and Taxes - Quarterly Statistics issued by the International Energy Agency. The country data for the report have, for the most part, been provided by delegates to the Committee on Fiscal Affairs’ Working Party N°9 on Consumption Taxes. The exchange rates used to convert national currencies into US dollars (USD) are average market rates for 2019 taken from the OECD Monetary and Financial Statistics, except for Annex Tables 3.A.5 where market rates for 2018 are used as taxes and prices refer to the year 2018; and Annex Tables 2.A.5 and 2.A.9 where the Purchase Power Parity (PPP) rates for GDP are used as they provide for a better comparison of the value of VAT relief thresholds (PPP rates for GDP 2019 are extracted from the OECD Statistics Database). These exchange rates are available in Annex B to this publication.

Consumption tax revenues in OECD countries have remained stable at 10.3 % of GDP on average, equal to the record level reached in 2016 (and an increase of 0.1% compared to 2015). These taxes represent almost one-third (30.8%) of total tax revenues in the OECD. Although the overall share of taxes on consumption in total tax revenues has remained relatively stable since 1975, the composition of these taxes has changed fundamentally. OECD countries’ reliance on taxes on general consumption (which includes VAT) has increased by more than 70%, from 4.1% in 1975 to 7.1% of GDP in 2018. This is primarily due to the introduction of VAT in most OECD countries. VAT is now the largest source of taxes on consumption, accounting for 6.8% of GDP and 20.4% of total tax revenue in OECD countries in 2018 on average.

Consumption taxes account for approximately one third of the total taxes collected in OECD countries. They have two common forms: taxes on general consumption (value added taxes and retail sales taxes) and taxes on specific goods and services (mainly excise duties).

Although most VAT systems are built on the same core VAT principles (see Chapter 1), there is considerable diversity in the design of VAT systems in OECD countries. This is notably illustrated by the variety of reduced rates, exemptions and other preferential treatments and special regimes that are widely used in OECD countries, for practical or historical reasons, to support certain economic sector or to achieve equity or social objectives.

Although excise may be levied on a broad range of products, excise taxes on alcohol, tobacco and hydrocarbon oils in particular raise significant revenues for governments in all OECD countries. In recent decades, governments have increasingly used these taxes not only to raise revenue but also to influence customer behaviour where consumption of certain products is considered harmful to health or to the environment.

Taxes related to the ownership and usage of vehicles were introduced in most OECD countries in the first half of the 20th century and have become an important source of tax revenue for many governments. All member countries rely on a range of tax instruments to ensure significant revenue from both private and commercial vehicle owners and road users. Vehicle and vehicle usage taxation in its widest definition represents a prime example of the use of the whole spectrum of consumption taxes for taxing vehicles and their use, including VAT as well as ad quantum or ad valorem taxes (see definitions in Chapter 3). These taxes have progressively been adapted to influence consumer behaviour and curb transport externalities, in particular environmental externalities.