Tax effort

The tax effort is the result of dividing the tax burden by the GDP per capita.

Where:

TE: Tax effort

FP: Fiscal pressure

While the tax burden compares tax revenue with the country's total GDP, the tax effort, as we have seen, uses GDP per capita, i.e., it measures the ratio between tax burden and per capita income.

It is important to bear in mind that neither the tax burden nor the tax effort reflects the distributive burden of taxes, since in two countries with the same tax burden, one of them may tax, for example, much more on companies and the other much more on individuals.