2023 Tax Competitiveness Index

The Tax Foundation of the United States published its annual report, the 2023 International Tax Competitiveness Index (ITCI). This report provides an analysis based on the results of quantifying the tax competitiveness of 38 OECD countries through the International Tax Competitiveness Index. The index is meaningful in that, through cross-country comparison, it highlights the need for openness and neutrality in the tax environment and can serve as an opportunity to promote national economic development by revitalizing business activity in each country.

First, according to the analysis, Korea ranked 23rd with a tax competitiveness score of 61.6, up one place from last year. By category, Korea showed strong competitiveness in consumption taxes, ranking 2nd in the world, but ranked in the lower tier in property taxes (32nd) and personal income taxes (37th), revealing a wide disparity across categories.

Second, Estonia had the highest tax competitiveness, followed by Latvia, New Zealand, Switzerland, and the Czech Republic. By contrast, Colombia, Italy, France, Chile, and Portugal were among the countries with the lowest tax competitiveness.

Third, the International Tax Competitiveness Index is divided into five categories, and a common feature across them is that higher tax rates lead to lower index scores. This suggests that high taxes and unreasonable tax systems adversely affect business activity and, furthermore, economic growth.

Finally, the COVID-19 pandemic caused many countries to undergo temporary changes in their tax systems. As countries face tax revenue shortfalls during economic downturns, they must consider the optimal tax structure that can achieve both economic recovery and increased tax revenue.

I. Introduction to the International Tax Competitiveness Index

II. Korea’s International Tax Competitiveness Index

III. Global International Tax Competitiveness Index by Category

IV. Policy Implications

References

Wiki:

https://www.cfe.org/w/bbsDetail.php?&idx=41

Original title: 2023년 조세경쟁력지수

Author: Dong-yong Choi

Date: 2023-10-19

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=report&pn=2&idx=26074