Lightly-Taxed EU Countries Top GDP Rankings

by Jeremy Hetherington-Gore, Tax-News.com, London

28 December 2005

Luxembourg and Ireland - both 'low tax' countries - topped the EU's GDP per capita rankings in purchasing power parity figures in 2004.

GDP per capita in the Member States ranged from 43% to 227% of the EU25 average in 2004. GDP per capita in Luxembourg was more than twice the EU25 average, while Ireland was about 40% above average.

Following up, with GDP around 20% above average, were the Netherlands, Austria, Denmark, Belgium, Sweden and the United Kingdom. Finland, France and Germany recorded figures about 10% above the EU25 average, and Italy and Spain were at the level of the average.

Cyprus, Greece and Slovenia were about 20% below the EU25 average. Portugal, the Czech Republic and Malta were around 30% below average, and Hungary about 40% below.

Slovakia, Estonia, Poland and Lithuania were around half the average, while Latvia was just below 45% of the EU25 average.

Eurostat points out, a touch sourly, that GDP per capita in Luxembourg is very high partly due to the large share of cross-border workers in total employment. While contributing to GDP, they are not taken into consideration as part of the resident population which is used to calculate GDP per capita. That simply means, of course, that Luxembourg is more successful than the countries around it at attracting workers. Go figure!

During the year, Luxembourg's and Cyprus's ratings increased by 4%, and Ireland's by 2%. The UK held steady while Malta's rating fell by 4%. For comparison, the US's rating rose by 1.5%, while Japan's and Switzerland's ratings rose marginally.

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