Tax Collection are on the Rise in Europe

June 17, 2014 Taxation in EU

LUXEMBOURG – The amount of taxes being collected in Europe is on the rise, but governments have been warned to ease the tax burdens placed on labor, and, instead, focus on environmental taxes.

On June 16th Eurostat released a new report on the tax-to-GDP ratios of each country in the EU over the 2012 year, showing that the amount of taxes paid rose during the year compared to the previous year, although a wide disparity still exists between the most taxed and least taxed countries in Europe.

According to Eurostat, the average tax-to-GDP ratio for the EU in 2012 was approximately 39.4 percent, while in 2011 the level was approximately 38.8 percent.

The increase was attributed to the fact that in 2012 the tax-to-GDP ratio rose in 22 out of the 28 countries of the EU, with only UK, Sweden, Slovakia, Romania, Portugal and Lithuania reversing the trend.

The highest taxed countries were shown to be Denmark and Belgium, with ratios of 48.1 percent and 45.4 percent respectively, while the lowest taxed country were shown to be Lithuania, with a rate of 272.2 percent.

Commenting on the finding detailed in the report, EU taxation commissioner Algirdas Semeta said that the report also highlighted the high proportion of tax revenues that are derived from taxes on personal incomes, and he recommended that governments could actually cut labor taxes and consumption taxes and put a much greater emphasis on environmental taxes, as such a shift will boost economic activity.

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