The rise of tax revenues in Southern Europe

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Southern Europe demonstrates that countries can substantially increase the taxes they collect in a relatively brief period of time.

The chart shows that in 1980, tax revenues in Greece, Portugal, and Spain accounted for around 20% of their respective GDP, based on data from UNU-WIDER. This was slightly less than the United States’s 25% of GDP and much lower than Germany’s 36%.

Within a few decades, the three countries greatly increased their tax revenues. By 2021, they had almost caught up with Germany, with revenues nearly 40% of GDP. Even the 2007–2008 economic crisis only briefly interrupted their upward trend.

This shows that governments can increase their tax collection to expand public policies, even in countries where taxes were comparatively low in the past.

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