Wages Hit By Personal Income Tax Hikes in 73% of OECD Countries

Workers' pay packets have taken a hit across the globe as new data shows that personal income tax has risen in 25 out of 34 of the world's largest economies over the past three years.

The revelation comes as countries reduce the value of tax-free allowances and tax credits and subject higher proportions of earnings to tax.

According to research from the Paris-based Organisation for Economic Co-operation and Development (OECD), the hikes in tax burdens on labour income in 2013 were largest in Portugal (due to higher statutory rates), and the United States (due to expiry of previous reductions in employee social security contributions).

The research also revealed that the average tax burden on employment incomes across the OECD increased by 0.2% in 2013, to 35.9%.

The study found that the 2013 rise follows a substantial increase in 2011 and a smaller one in 2012.

Since 2010, the tax burden has increased in 21 OECD countries and fallen in nine, partially reversing the reductions seen between 2007 and 2010.

The OECD said that the design and interaction of personal income tax systems, social security contributions and benefit systems is shown to have become more progressive for low-income households across the OECD.

The organisation explained this is principally attributed to growth in targeted tax credits or "make-work-pay" provisions for low-income workers, as well as increased child benefits for low-income households.

But there has been little change in progressiveness of taxation for single workers without children or those at higher income levels, although wide differences exist between countries.

The research also revealed that Ireland, Sweden and Slovenia report the greatest rise in progressive taxation for single taxpayers without children, while the largest decreases in progressivity for single taxpayers without children were seen in Germany, Hungary and Israel.