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Published: 9 July 2009

Tax ratio rose slightly in 2008

According to Statistics Finland’s revised data, the ratio of taxes and compulsory social security contributions to gross domestic product was 43.1 per cent in 2008. In 2007, the ratio was 43.0 per cent. The tax ratio rose because tax accruals grew by more than GDP in nominal terms. In 2008, tax accruals grew by 3.1 per cent and GDP in nominal terms by 2.8 per cent. The accruals of taxes and social security contributions totalled EUR 79.6 billion.

In 2008, revenue from income tax amounted to EUR 31.1 billion, or 2.3 per cent more than one year earlier. Revenue from corporate income tax diminished by seven per cent and totalled EUR 6.4 billion. State revenue from income tax paid by households also diminished slightly. By contrast, the revenue received by local government from income tax paid by households increased so that total accruals of household income tax amounted to EUR 24.2 billion, or 4.4 per cent more than in 2007. Accruals of compulsory social security contributions amounted to EUR 22.3 billion. EUR 16.7 billion of this were employment pension contributions, of which 6.6 per cent more were accrued than in the year before.

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 non-financial corporations, stood at 21.8 per cent in 2008. In 2007 the net tax ratio was 22.2 per cent. The net tax ratio fell because proportional to GDP public transfers grew faster than tax accruals. Increasing pension expenditure was the major contributor to the growth in public transfers.

The initial preliminary data released in February put the tax ratio for 2008 at 42.7 per cent. The higher tax ratio of 43.1 per cent indicated by these revised data is mainly explained by a downward revision of GDP in nominal terms.

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

Sector	Year	Million euro	Ratio to GDP, %
S13+S212 Total	2007	77 265	43.0
	2008	79 642	43.1
S1311 Central Government	2007	40 768	22.7
	2008	41 261	22.3
S1313 Local Government	2007	16 478	9.2
	2008	17 505	9.5
S1314 Social Security Funds	2007	19 819	11.0
	2008	20 670	11.2
S212 European Union	2007	200	0.1
	2008	206	0.1

1) Preliminary data

Source: National Accounts, Statistics Finland

Inquiries: Niina Suutarinen (09) 1734 3302

Director in charge: Ari Tyrkkö

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Updated 9.7.2009