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

Francesco Forte

BNL Quarterly Review, 1997, vol. 50, issue 202, 337-375

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.

Keywords: GDP; National Net Value Added Produced; Tax burden; Public economy (search for similar items in EconPapers)
JEL-codes: H20 H21 (search for similar items in EconPapers)
Date: 1997
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