Gold Magazine February - March 2013, Issue 23 | Page 95

tax revenues

ON THE
RISE

PROACTIVE EU TAX
MEASURES LEAD TO
INCREASED REVENUES

By Kyproulla Papachristodoulou

A

ctive revenue-raising
measures employed
by some EU member
states during the financial crisis resulted
in an increase in tax
revenue to pre-crisis

levels in 2011.
According to the latest Eurostat analysis, despite the fact that tax revenue fell in
the EU and the euro area (EA) in 20082009 for the first time since 1995, a sharp
increase was nevertheless recorded in
2011 bringing total tax revenues to about
90% of total general government revenue.
The proportional increase in tax
revenues was higher than that in GDP,
which has also resulted in an increase in
the tax-revenue-to-GDP ratio in both the
EU and the euro area.
As noted, this recovery can be partly
attributed to revenue-raising measures
such as increases in the VAT rate and
the introduction of new taxes, such as
bank levies, air passenger duties and
property taxes.

THE PROPORTIONAL
INCREASE IN TAX REVENUES
WAS HIGHER THAN THAT IN
GDP.
The effects of the economic and
financial crisis on tax revenues from 2007
onwards were very obvious. From its last
spike in 2006 in the EU-27 the ratio of
tax revenue to GDP decreased by 1.1%
to 39.6 % in 2010, while the ratio for the
EA-17 also decreased by 0.9% of GDP
from its peak of 41.2% in 2007 to 40.3%
in 2010.
In 2011, tax revenues in terms of GDP
increased substantially, due to absolute

tax revenues increasing along the same
path as in the previous year, but nominal GDP growth being lower. This also
reflects proactive tax measures taken by
member states in recent years to correct
their deficits. EA-17 tax revenue as a
percentage of GDP remains at a slightly
higher level than EU tax revenue.
As a ratio of GDP, tax revenues (including social contributions) accounted for 40.0% of GDP in the
European Union (EU27) and 40.8% of
GDP in the euro
area (EA-17). This
represents an increase of 0.4% of GDP in
the EU-27 and 0.5% in the EA-17.
ac
Taxes on production and imports accounted for 13.4% of GDP and current
taxes on income, wealth, etc. 12.6%
of GDP. The share of current taxes on
income, wealth, etc. decreased between
2007 and 2010 but a slight increase
was seen in 2011. The share of social
contributions increased noticeably from
2008 to 2009, decreased further in 2010,
but stayed relatively stable between 2010
and 2011 to reach 13.9% of GDP.
The crisis – together with fiscal policy
measures adopted in the countries – had
a strong impact on the level and composition of tax revenue in 2009-2011, and the
first effects had already become visible in
2008.
Figures show that the ratio of tax
revenue to GDP was highest in Denmark,
Belgium and France (48.6%, 46.7% and
45.9% respectively in 2011) while the
lowest shares were recorded in Lithuania
(26.4% of GDP), Bulgaria (27.2%) and
Latvia (27.7%).
Among the countries which have joined
the EU since 2004, Slovenia and Hungary
had t