Shift in tax burden and its impact on economic growth in the European Union

Irena Szarowska

MPRA Paper from University Library of Munich, Germany

Abstract: This article deals with a tax burden in the European Union in as financial and economic crisis has impacted also on tax systems in the European Union. Governments´ tax measure aims to consolidate public finance and promote an economic growth. The article provides empirical evidence on a shift in a tax burden and its structure and analyzes the effects of shift in tax burden on economic growth in the EU. It is used the Eurostat definition to categorize tax burden by economic functions and implicit rates of consumption, labour and capital are investigated. The analysis is based on annual data of the EU member states in a period 1995-2010. Pairwise Granger Causality Test was used for examining relations between economic growth and tax burden by economic functions in short-term. Results confirm that there is two-way causality between change of implicit tax rate of consumption and GDP growth; and also GDP growth Granger-cause change of implicit tax rate of capital and implicit tax rate of labour through one-way causality. On average, labour taxes have decreased by 1.9 p.p., capital taxes have also decreased – by 2.1 p.p., but consumption taxes have mildly increased by 0.4 p.p. in the European Union in a period 1995-2010.

Keywords: tax burden; tax shift; implicit tax rates; growth conductive system; economic functions; economic growth (search for similar items in EconPapers)
JEL-codes: E62 H2 O11 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-acc, nep-fdg, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Acta Universitatis Agriculturae et Silviculturae Mendeleianae Brunensis 4.61(2013): pp. 1153-1160

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Journal Article: Shift in tax burden and its impact on economic growth in the European Union (2013)
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