The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of Gross Domestic Product, stood at 40.3% in the European Union (EU) in 2018, a slight increase compared with 2017 (40.2%), at 33.8% in Cyprus (compared to 33.3% in 2017) and 41.5% in Greece (stable compared to 2017), according to data released today by Eurostat, the statistical service of the EU.
According to Eurostat, in the euro area, tax revenue accounted for 41.7% of GDP in 2018, up from 41.5% in 2017. Tax indicators are compiled in a harmonised framework based on the European System of Accounts (ESA 2010), enabling an accurate comparison of the tax systems and tax policies between EU Member States.
Eurostat registers that tax-to-GDP ratio varies significantly among member states, with the highest share of taxes and social contributions in percentage of GDP in 2018 being recorded in France (48.4%), Belgium (47.2%) and Denmark (45.9%), followed by Sweden (44.4%), Austria (42.8%), Finland (42.4%) and Italy (42.0%). At the opposite end of the scale, Ireland (23.0%) and Romania (27.1%), ahead of Bulgaria (29.9%), Lithuania (30.5%) and Latvia (31.4%) registered the lowest ratios.
Compared with 2017, the tax-to-GDP ratio increased in sixteen member states in 2018, with the largest rise being observed in Luxembourg (from 39.1% in 2017 to 40.7% in 2018), ahead of Romania (from 25.8% to 27.1%) and Poland (from 35.0% to 36.1%). In contrast, decreases were recorded in seven member states, notably in Denmark (from 46.8% in 2017 to 45.9% in 2018), Hungary (from 38.4% to 37.6%) and Finland (from 43.1% to 42.4%).
In 2018, taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6% of GDP), closely followed by net social contributions (13.3%) and taxes on income and wealth (13.2%). The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.2%), ahead of taxes on production and imports (13.3%) and taxes on income and wealth (13.0%). Looking at the main tax categories, a clear diversity prevails across the EU Member States. In 2018, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.4% of GDP), Croatia (20.1%) and Hungary (18.6%), while they were lowest in Ireland (8.0%), Romania (10.7%) and Germany (10.8%). For taxes related to income and wealth, the highest share by far was registered in Denmark (28.9% of GDP), ahead of Sweden (18.6%), Belgium (16.8%) and Luxembourg (16.4%). In contrast, Romania (4.9%), Lithuania (5.7%) and Bulgaria (5.8%) recorded the lowest taxes on income and wealth as a percentage of GDP. Net social contributions accounted for a large proportion of GDP in France (18.0%) and Germany (17.1%), while the lowest shares were observed in Denmark (0.9% of GDP), Sweden (3.4%) and Ireland (4.2%).
More specifically in Cyprus, the structure of tax revenue, by main tax category, 2018 was 16% from taxes on production and imports (of which 9.9% is the VAT), 9.1% from taxes on income, wealth, etc (of which 3.2% comes form taxes on individual or household income and 5.5% from taxes on the income or profits of corporations) and 8.7% from Net social Contributions.
Finally in Greece, the Structure of tax revenue, by main tax category, 2018 was 17.1% from taxes on production and imports (of which 8.3% is the VAT), 10.1% from taxes on income, wealth, etc (of which 6.2% comes form taxes on individual or household income and 2.2% from taxes on the income or profits of corporations) and 14.2% from Net social Contributions.
(Cyprus News Agency)