A report released by the European Union’s statistical office yesterday showed that the overall burden of taxation across the 25 member states decreased from 41.1% to 40.4% between the years 2001 and 2002, but revealed large differences in the tax burdens between member states.
The publication ‘Structures of the taxation systems in the EU’ issued Thursday by Eurostat provided for the first time tax revenue data for the ten new member states and for Norway, and additional implicit tax rates (i.e. average effective tax rates) on corporate income, on capital and business income of households and on energy consumption.
According to the report, substantial differences exist between member states in terms of total tax burden. Sweden recorded the highest tax-to-GDP ratio (50.6% in 2002), followed by Denmark (48.9%), Belgium (46.6%) and Finland (45.9%). The lowest ratios were observed in Ireland (28.6%), Lithuania (28.8%), Latvia and Malta (31.3% each) and Cyprus (32.5%).
The tax burden declined in 2002 as compared with 2001 in 16 out of 24 member states with Poland (from 41.2% to 39.1%), Ireland (from 30.5% to 28.6%), Sweden (from 52.2% to 50.6%) and the United Kingdom (from 37.3% to 35.8%) recording the largest reductions.
Meanwhile, 8 out of 24 member states saw tax-to-GDP ratio increases, which was most pronounced in Luxembourg (from 40.7% to 41.9%) and the Czech Republic (from 34.3% to 35.4%).
Looking at the different types of taxes and their share in total tax revenues, generally, the new member states have a lower share of direct taxes in relation to total tax revenues and a higher share of indirect taxes and social security contributions.
In 2002, Poland (18.7%), Slovenia (20.2%) and Slovakia (22.6%) recorded the lowest shares of direct taxes, compared to 33.1% for the EU25, while Denmark (60.5%), the United Kingdom (44.2%) and Finland (42.9%) had relatively high shares of direct taxes.
With regard to indirect taxes, Ireland (43.7%), Lithuania (43.5%), Cyprus (42.7%) and Malta (42.5%) recorded the highest values compared to 34.8% for the EU25, while Belgium (29.7%), Germany (30.5%) and Finland (30.6%) registered the lowest shares.
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