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Published: 27 February 2009

Tax ratio declined and increase in tax accruals slowed down in 2008

In 2008 the proportion of taxes and compulsory social security contributions levied by general government and the EU institutions of GDP, i.e. the tax ratio, stood at 42.7 per cent. In 2007 the tax ratio was 43.0 per cent. In 2008 the accruals of taxes and compulsory social security contributions totalled EUR 79.5 billion. The decline in the tax ratio is explained by the under 3 per cent increase in total tax accruals, while GDP grew by 3.6 per cent in nominal terms. These data are based on the preliminary national accounts data for 2008.

The rate of growth of the state’s tax revenue slowed down to one per cent in 2008. Especially the revenue from income tax paid by corporations turned to a decline towards the end of the year. The increase in tax revenue received by local government was 6.2 per cent in 2008. This resulted from growth in the revenues from municipal tax and real estate tax. The accruals of compulsory social security contributions paid to social security funds increased by 3.8 per cent. The increase in the accruals of income tax paid by households and compulsory social security contributions is explained by the over 7 per cent growth in the sum of wages and salaries received by households.

The net tax ratio, which refers to the tax ratio less the subsidies and current and capital transfers paid by general government to households and enterprises, stood at 21.6 per cent in 2008. The decline in the net tax ratio is the result of faster growth of public transfers than in tax accruals. Increasing pension expenditure was the major factor behind the growth in public transfers.

Taxes and compulsory social security contributions by sector, 2007 - 2008 ¹⁾

		Million euro	Ratio to GDP, %
Sector	Year
S13+S212 Total	2007	77 265	43,0
	2008	79 498	42,7
S1311 Central Government	2007	40 768	22,7
	2008	41 206	22,1
S1313 Local Government	2007	16 478	9,2
	2008	17 505	9,4
S1314 Social Security Funds	2007	19 819	11,0
	2008	20 581	11,1
S212 European Union	2007	200	0,1
	2008	206	0,1

1) Preliminary data

Source: National Accounts, Statistics Finland

Inquiries: Asko Kauppinen (09) 1734 3216

Director in charge: Ari Tyrkkö

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Updated 27.2.2009