Friday, July 14, 2017
The European Commission has published its annual taxation trends report.
The report generally covers 2015, although it does also note changes to tax rates introduced in 2017.
According to the report, tax revenues as a percentage of GDP across the EU's 28 member states reached a plateau in 2015. At 38.7 percent of GDP, the EU tax level is high compared with other advanced economies, including the US, Japan, New Zealand, Canada, and Australia.
22 member states' tax burden increased in 2015, with Lithuania, Estonia, and Slovakia seeing increases in tax-to-GDP ratios in particular. In six member states, the tax-to-GDP ratio fell, with the largest decreases in Ireland and Denmark. Denmark, France, and Belgium have the highest tax-to-GDP ratios, while Ireland, Romania, and Bulgaria have the lowest.
The report explained that the structure of taxation varies across member states. The highest share of direct taxes in proportion to total tax revenue was recorded in Denmark (65.8 percent), followed by Ireland, the UK, Sweden, and Malta. The report stated that in countries where there are lower shares of direct taxes, this is often counterbalanced by higher indirect taxes, such as in Bulgaria, Croatia, and Hungary.
Across the EU, taxes on (employed) labor income were the largest source of revenue in 2015. The implicit tax rate on labor for the EU-28 was 35.9 percent in 2015. Since 2012, it has consistently hovered around the 36 percent mark. The highest implicit tax rate (ITR) on labor was found in Belgium, while the lowest was in Malta.
Revenues from consumption taxes as a percentage of total taxation rose from 28.5 percent in 2014 to 29.7 percent in 2015.
The report also noted that the EU average top rate of tax on corporate income fell from 22.5 percent in 2016 to 21.9 percent in 2017. It said that rates still vary substantially within the EU, with Bulgaria imposing the lowest minimum rate and Malta, France, Belgium, and Germany setting the highest top rates. Since 2009, 15 member states have reduced their top rates, while three have raised them.