Most countries adjust labor taxes for inflation each year using lagging information, concludes the OECD study, which highlights the importance of indexing labor taxation to inflation in order to avoid the “fiscal burden” phenomenon.
As the Organization for Economic Co-operation and Development (OECD) countries recorded inflation peaks in 30 years, this year’s Payroll Taxation report, released on Tuesday, dedicates part of the indexation practice. this type of tax, trying to understand how a nominal wage increase eventually turned into a “fiscal burden” whereby the tax eventually absorbs the wage increase.
While average wages showed “strong growth” in most OECD countries between 2019 and 2022, they have not kept pace with last year’s inflation, which has ultimately led to a fall in real purchasing power, according to the study.
Author: Portuguese
Source: CM Jornal
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