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The measurement of 'fiscal burden' on GDP instead than on national net value added produced: a chapter in fiscal illusion

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  • F. FORTE

    (Universita' degli Studi di Roma "La Sapienza")

Abstract
The work calls attention to a major macroeconomic fiscal illusion: that arising from the current official practice of expressing the main fiscal indicators, and particularly the tax burden, as a percentage of GDP rather than NDPF (Net Domestic Product at Factor Costs). This methodology causes a systematic undervaluation of the tax burden, by something between 25% (Sweden and Austria) and 15% (Switzerland). Correctly measured, the tax burden in most European countries is above 50% and in the Nordic countries above 65%, or close to it! Thus, tax payers are deceived about the true cost and size of the public economy. GDP’s origin and widespread adoption is examined as well as the development of the notion of national income adopted to assess the tax burden.

Suggested Citation

  • F. Forte, 1997. "The measurement of 'fiscal burden' on GDP instead than on national net value added produced: a chapter in fiscal illusion," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 50(202), pages 337-375.
    • Handle: RePEc:psl:bnlqrr:1997:35
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/10582/10466
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    More about this item

    Keywords

    GDP; National Net Value Added Produced; Tax burden; Public economy;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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