Tax burden

The tax burden, also called the tax ratio, shows what share of a country’s total income ends up with the government through taxes. It is found by comparing the government’s tax collections for a year with the nation’s GNP or national income. The percentage figure indicates how dependent the government is on taxes and the extent to which national income is channelled toward public spending.

Example: Suppose a government raises ₹20 lakh crore in taxes while the national income for that year is ₹100 lakh crore. The tax ratio would be: 20 100 × 100 = 20 020 ​ ×100=20% This means one-fifth of the nation’s income is collected as tax revenue.