UPDATE: Developed Country Taxes Rose In 2006 - OECD

LONDON --Government tax revenues as a share of economic output continued to rise in 2006 and may have increased last year, the Organization for Economic Cooperation and Development said Wednesday.

In its annual report on taxation in its 30 rich-country members, the OECD said the tax take rose to 35.9% of gross domestic product in 2006, up from 35.8% in 2005 and close to its all-time high of 36.1% in 2000.

Preliminary figures for 2007 suggest the tax take may rise again. The OECD said tax takes fell in 13 of the countries for which it has provisional estimates, and rose in 11.

But three of those 11 are members of the Group of Seven leading industrialized nations, including the U.S., the world's largest economy. The U.S. government took revenues equivalent to 28.3% of GDP, up from 28.0% in 2006.

In Germany and Italy, the tax take also rose last year, while in the U.K. and France the tax take fell. It was unchanged in Canada. Figures are not yet available for Japan, the remaining member of the G7. The OECD said it's unclear how the tax take will be affected by the global economic slowdown.

"The current economic slowdown is going to put additional pressure on government budgets," said Angel Gurria, the OECD's secretary general.

The OECD said the U.S. and U.K. governments have already acknowledged that their tax revenues from the financial services industry will be lower than they had previously forecast. The OECD said they and other countries are also likely to see a drop in corporate tax revenues.

Governments appear willing to borrow heavily to support banking systems and economic growth. That suggests that the tax take may decline as a share of gross domestic product. But it is likely to rise again over the medium term when those debts are repaid.

In 2007, northern European governments continued to be the heaviest taxers, with Denmark's government taking the largest share of GDP at 48.9%, followed by Sweden's government at 48.2% of GDP.

Mexico had the lowest tax take in 2007 at 20.5% of GDP, followed by Turkey at 23.7% of GDP.

The OECD said taxes on corporate income rose to 3.9% of GDP from 3.7% in 2006. Norway took by far the largest share, equivalent to 12.9% of GDP. The next highest taxer of company income was Australia, at 6.6% of GDP. In the U.S., taxes on company income were equivalent to 3.3% of GDP.

-Paul Hannon, Dow Jones Newswires; +44 20 7842 9491; paul.hannon@dowjones.com