Bulgaria, Romania have lowest tax-to-GDP ratios in EU – Eurostat

Bulgaria, Romania have lowest tax-to-GDP ratios in EU – Eurostat

Sofia, January 15, 2016/Independent Balkan News Agency

By Clive Leviev-Sawyer of The Sofia Globe

Bulgaria had the second-lowest tax-to-GDP ratio in the European Union in 2014, at 27.8 per cent, with Romania recording the lowest at 27.7 per cent, according to figures released by EU statistics agency Eurostat on January 15.

Eurostat noted that in Bulgaria, total revenue from taxes and social contributions had been, as a percentage of GDP, 30.3 per cent in 2005, 26.3 per cent in 2010, 27.9 per cent in 2013 and 27.8 per cent in 2014.

The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of GDP, was 40 per cent in the EU) in 2014, compared with 39.9 per cent in 2013. In the euro zone, tax revenue accounted in 2014 for 41.5 per cent of GDP, up from 41.2 per cent in 2013.

Over recent years, the tax-to-GDP ratio in both zones has increased continuously since its low point in 2010, Eurostat said.

The tax-to-GDP ratio varies significantly among EU countries, with the highest share of taxes and social contributions in percentage of GDP in 2014 being recorded in Denmark (50.8 per cent), followed by Belgium and France (both 47.9 per cent), Finland (44.0 per cent), Austria (43.8 per cent), Italy and Sweden (both 43.7 per cent).

At the opposite end of the scale, Romania (27.7 per cent), Bulgaria (27.8 per cent), Lithuania (28 per cent) and Latvia (29.2 per cent) registered the lowest ratios.

Compared with 2013, the tax-to-GDP ratio increased in 2014 in most EU countries, with the largest rise being observed in Denmark (from 48.1 per cent in 2013 to 50.8 per cent in 2014), ahead of Cyprus (from 31.6 per cent to 34.2 per cent) and Malta (from 33.6 per cent to 35.0 per cent).

In contrast, decreases were recorded in eight EU countries, notably in the Czech Republic (from 34.8 per cent in 2013 to 34.1 per cent in 2014) and the United Kingdom (from 34.9 per cent to 34.4 per cent).

Looking at the main tax categories, a clear diversity prevails across the EU member states, Eurostat said.

Taxes on production and imports were the most significant tax category in 13 EU countries, net social contribution in nine and taxes on income and wealth in six.

In 2014, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.1 per cent of GDP), Croatia (18.8 per cent) and Hungary (18.6 per cent), while they were lowest in Slovakia (10.8 per cent) and Germany (10.9 per cent).

For income and wealth related taxes, the highest share by far was registered in Denmark (33.4 per cent of GDP), ahead of Sweden (17.9 per cent), Belgium (16.8 per cent) and Finland (16.5 per cent).

In contrast, Lithuania (5.1 per cent) and Bulgaria (5.3 per cent) recorded the lowest taxes on income and wealth as a percentage of GDP.

Net social contributions accounted for a significant proportion of GDP in France (19.2 per cent), Belgium (16.9 per cent) and Germany (16.5 per cent), while the lowest shares were observed in Denmark (1.1 per cent of GDP), Sweden (3.7 per cent) and Ireland (5.8 per cent).

In 2014, taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6 per cent of GDP), closely followed by net social contributions (13.4 per cent) and taxes on income and wealth (12.8 per cent).