In 2024, many governments around the world increased tax revenues to address rising spending needs driven by escalating health expenditures and an ageing population. A new report from the Organisation for Economic Co-operation and Development (OECD) highlights this trend, showing a shift towards enhancing social security contributions to bolster the long-term sustainability of social protection systems.
Key Findings from the OECD Report
The tenth annual edition of Tax Policy Reforms: OECD and Selected Partner Economies provides an in-depth analysis of tax reforms introduced in 2024 across 86 jurisdictions, including all OECD member countries. The report indicates that governments are increasingly implementing reforms aimed at raising revenues to meet specific spending needs, particularly those associated with the implications of an ageing population.
Among the notable trends observed is the introduction or expansion of personal income tax relief aimed at supporting employment. This effort is particularly focused on specific demographic groups and sectors as a means to alleviate some effects of population ageing. The report underscores a continuation of a trend identified in 2023, where governments are moving away from broad tax relief measures enacted during the COVID-19 pandemic and the subsequent inflationary period. Instead, they are adopting a combination of rate increases and more targeted tax support.
“Tax policies served as a stabilising tool to protect households and sustain demand in the wake of recent shocks,”
stated Mathias Cormann, OECD Secretary-General. He added that the reforms being introduced are crucial for rebalancing public finances, ensuring fiscal sustainability, and preparing for future challenges.
Shifting Tax Policies and Health Initiatives
In line with trends from the previous year, many countries began scaling back temporary value-added tax (VAT) rate cuts and base-narrowing measures in 2024, as inflationary pressures eased. Some nations even increased their standard VAT rates. The report also highlights a rise in health-related excise tax reforms as governments sought to mobilise revenue while promoting healthier lifestyles. This includes increased taxes on tobacco, alcohol, and sugar-sweetened beverages.
The trend also reflects a shift from temporary fuel tax relief measures towards higher fuel excise taxes. Furthermore, high-income countries have strengthened carbon pricing measures for the second consecutive year. Several nations raised their carbon tax rates or expanded their scope to incorporate new sectors. This adjustment supports a broader strategy to transition to a low-carbon economy.
Governments are increasingly combining carbon pricing with targeted tax incentives. Examples include reduced VAT rates on solar panels and heat pumps, personal income tax relief for sustainable transport, and corporate income tax incentives for clean investments. These initiatives illustrate a comprehensive approach to addressing both fiscal and environmental challenges.
For further details, the complete report, including data and summaries, is available at the OECD’s official website: OECD Tax Policy Reforms 2025.
