European Commission (2015). Tax Reforms in EU Member States, Working Paper no. 58
Chapter 5
OVERVIEW OF TAX POLICY CHALLENGES
This chapter provides an overview of the changes that Member States could potentally
make to improve diferent areas of their tax policy.
It should be noted that a number of indicators are soon to be updated, which could afect
the results set out below
The European Commission and Member States work together, in partcular within the
contex t of the European Semester, to gain a beter understanding of the current strengths
and weaknesses of their systems, beyond what is shown by the indicators alone, and to
identfy challenges and consider possible solutons.
Fiscal Consolidaton
The results of the indicator-based screening suggest that Ireland, Croata, Portugal
and
Slovenia in partcular need to do more to ensure fscal consolidaton, while, at the
same tme, they have potental scope to use tax aton to help address this issue.
The UK also needs to improve the sustainability of its public fnances, but its scope to
increase tax aton is considered a borderline case. Although its overall tax -to-GDP
rato is relatvely low compared to the EU average, the least distortve tax es are not
at a low level
High Labor Taxes
The indicator-based screening also found that many Member States (Belgium, the
Czech Republic, Germany, Estonia, France, Croata, Italy, Latvia, Lithuania, Hungary,
the Netherlands, Austria, Portugal, Romania, Finland and Sweden) have a relatvely
high tax burden on labour, and would have at least some scope for shifing the tax
burden to less distortve tax es, such as consumpton tax es, recurrent property tax es
and environmental tax es
Chapter 2 also identfed a number of Member States (Germany, Estonia, Latvia,
Hungary, the Netherlands and Sweden) that appear to have potental scope for a
partally unfnanced reducton in labour tax .
These results should, however, be treated with great cauton, and should be
interpreted in the contex t of Member States’ obligaton under the Stability and
Growth.
In general, the best way to fnance a reducton in high labour tax es tends to be to
reduce public ex penditure or to shif tax aton towards less distortve tax es.
Broadening Tax Bases
Chapter 3 discussed a range of challenges in relaton to the broadening of tax bases,
and also considered other issues connected to the design of tax es.
Need for Higher VATs
Chapter 5
OVERVIEW OF TAX POLICY CHALLENGES
This chapter provides an overview of the changes that Member States could potentally
make to improve diferent areas of their tax policy.
It should be noted that a number of indicators are soon to be updated, which could afect
the results set out below
The European Commission and Member States work together, in partcular within the
contex t of the European Semester, to gain a beter understanding of the current strengths
and weaknesses of their systems, beyond what is shown by the indicators alone, and to
identfy challenges and consider possible solutons.
Fiscal Consolidaton
The results of the indicator-based screening suggest that Ireland, Croata, Portugal
and
Slovenia in partcular need to do more to ensure fscal consolidaton, while, at the
same tme, they have potental scope to use tax aton to help address this issue.
The UK also needs to improve the sustainability of its public fnances, but its scope to
increase tax aton is considered a borderline case. Although its overall tax -to-GDP
rato is relatvely low compared to the EU average, the least distortve tax es are not
at a low level
High Labor Taxes
The indicator-based screening also found that many Member States (Belgium, the
Czech Republic, Germany, Estonia, France, Croata, Italy, Latvia, Lithuania, Hungary,
the Netherlands, Austria, Portugal, Romania, Finland and Sweden) have a relatvely
high tax burden on labour, and would have at least some scope for shifing the tax
burden to less distortve tax es, such as consumpton tax es, recurrent property tax es
and environmental tax es
Chapter 2 also identfed a number of Member States (Germany, Estonia, Latvia,
Hungary, the Netherlands and Sweden) that appear to have potental scope for a
partally unfnanced reducton in labour tax .
These results should, however, be treated with great cauton, and should be
interpreted in the contex t of Member States’ obligaton under the Stability and
Growth.
In general, the best way to fnance a reducton in high labour tax es tends to be to
reduce public ex penditure or to shif tax aton towards less distortve tax es.
Broadening Tax Bases
Chapter 3 discussed a range of challenges in relaton to the broadening of tax bases,
and also considered other issues connected to the design of tax es.
Need for Higher VATs
