Definition: Implicit tax rate
From a macroeconomics point of view, a tax rate is calculated by dividing the revenues from taxes on a special activity or good by an appropriate corresponding aggregate tax base from national accounts statistics. This yields the implicit tax rate (ITR), sometimes also referred to as an average or effective tax rate. The calculation of implicit tax rates is relatively straightforward and requires less statistical input than, for example, microeconomic or marginal tax rates. At present, the ITR are defined as follows:
- ITR consumption;
- ITR labour employed;
- ITR other factors of production.
Structures on the taxation system in the European Union 1970-1997, Eurostat 2000