Tax burden on Estonian workforce decreased, OECD ranking remains unchanged (1)
Estonia was one of just three OECD member countries whose tax wedge decreased by at least one percent in 2015; the tax wedge decreased by one percent in Estonia, 1.3 percent in Greece, and 1.2 percent in Spain.
The level of tax burden on labor is calculated based on payroll costs and accompanying taxes, including both employer- and employee-paid taxes. The Organisation for Economic Co-operation and Development (OECD) then calculates the tax wedge, which is defined as the ratio between the amount of taxes paid by an average single employee without children and the corresponding total labor cost for the employer, by also taking deductions into account, including for example tax-exempt income.
The tax wedge in Estonia, which fell from 40 percent to 39 percent, still remains above the average tax wedge of 35.9 percent, the latter figure of which remained unchanged between 2014 and 2015.
Estonia remains ranked 15th in size of tax wedge among OECD member states.
The highest tax wedge in 2015 was in Belgium at 55.3 percent, followed by Austria at 49,5 percent, and Germany at 49.4 percent. The lowest tax wedge in 2015 was in Chile at just 7 percent, followed by New Zealand at 17.6 percent, and Mexico at 19.7 percent.