The governmental tax revenue is measured and classified according to a templet of survey of the National economy, recognize the effect on the economy for each type of tax.
- Production and import taxes are for example, value added taxes, duties, registration fees, and fuel fees.
- Income- and property taxes are taxes and duties such as governmental taxes, municipal taxes, corporation taxes and pension fees.
- Compulsory social insurances are for example fees to Labor Market Supplemental Pension Fund, unemployment insurance, fees to the parental leave system, and fees to health insurance.
- Capital taxes are mainly inheritance tax.
The total tax burden is taxes in per cent of gross domestic product.
The adjusted tax burden in per cent of gross domestic income.
The modified tax burden is the available general gross income in percentages of the gross domestic product.
The factor tax level is taxes in percent of gross domestic product at factor cost.
Various measurements of tax burden:
The most common method that is used in international comparisons is, when all taxes and duties are measured against the gross domestic product in current prices.
Total tax burden = tax in percentages of GDP
The gross domestic product is all the production in the economy with the production consumption subtracted. The gross domestic product does therefore not depict the income of the economy. One part of the income is wages and property incomes from abroad. Also operating transfers from other countries, for example the Danish Government subsidy to the Faroe Islands. As well as the wages, incomes and transfers out of the country. All these combined create the gross domestic income in current prices.
If all taxes and duties are measured against the available gross domestic income, it becomes apparent how much of the available gross national income the general service sector gets of the taxes and duties. This is called adjusted tax burden and is measured like this:
Adjusted tax burden = taxes in percentages of the available gross domestic income
A portion of the general tax revenue is returned to the citizens in the form of incomes and industry subsidies. The wages are not a part of the gross domestic product, because this is solely a redistribution of incomes and consumption possibilities. The available gross domestic income illustrates how much the citizens pay of the general consumption and savings. The modified tax burden does therefore depict how much of the available gross national income is of the disposal of the general service sector. This is calculated as:
Modified tax burden = Available general gross income in percentages of the available gross domestic income
Commodity- and production taxes are included in both the tax burden in the GDP in current prices. If a large sum of the taxes is collected through income tax, and a smaller sum through commodity- and production taxes, will the total tax burden increase, all else being equal, despite the total taxes being unaffected. This is considered if commodity- and production taxes (net) are excluded, and factor prices are used instead of current prices. The gross domestic income is measured in factor prices and is called gross factor income. The factor tax level is calculated like this:
Factor tax level = Taxes in percentages of the gross factor income