Acta Univ. Agric. Silvic. Mendelianae Brun. 2013, 61(4), 1153-1160 | DOI: 10.11118/actaun201361041153

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

Irena Szarowská
Department of Finance, School of Business Administration, Silesian University, Univerzitní nám. 1934/3, 733 40 Karviná, Czech Republic

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. 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. 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-causes change of implicit tax rate of capital and implicit tax rate of labour through one-way causality.

Keywords: tax burden, tax shift, implicit tax rates, growth conductive system, economic functions, economic growth
Grants and funding:

This article ensued thanks to the support of the grant GA ÈR 403/11/2073 Procyclicality of financial markets, asset price bubbles and macroprudential regulation.

Received: April 11, 2013; Published: July 13, 2013  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Szarowská, I. (2013). Shift in tax burden and its impact on economic growth in the European Union. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 61(4), 1153-1160. doi: 10.11118/actaun201361041153
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. ACEMOGLU, D., 2009: Introduction to Modern Economic Growth. New York: Princeton University Press, 552 p. ISBN 9780691132921.
    2. BARRO, R. J., 1991: Economic growth in a cross-section of countries. Quarterly Journal of Economics, 106, 2: 407-43. ISSN 0033-5533. DOI: 10.2307/2937943 Go to original source...
    3. CAREY, D., TCHILINGUIRIAN, H., 2000: Average Effective Tax Rates on Capital, Labour and Consumption. OECD Economics Department Working Papers, No. 258, Paris: OECD Publishing. http://dx.doi.org/10.1787/247874530426. Go to original source...
    4. DOUGHERTY, CH., 2007: Introduction To Econometrics. Oxford: Oxford University Press, 464 p. ISBN 0199280967.
    5. Eurostat, 2012: Taxation trends in the European Union. Luxembourg: Publications Office of the European Union, 269 p. ISBN 978-92-79-22788-2.
    6. GARCÍA, S., RODRIGUÉZ, E., ARIAS, A., 2011: Corporate Tax Burden in the European Union. EC Tax Review, 20, 1: 41-55. ISSN 0928-2750. Go to original source...
    7. GRANGER, C., 1969: Investigating Causal Relations by Econometric Models and Cross-spectral Methods. Econometrica, 37, 3: 424-438. ISSN 0012-9682. DOI: 10.2307/1912791 Go to original source...
    8. HILL, R., 2008: Optimal taxation and economic growth. Public Choice, 134, 3-4: 419-427. ISSN 0048-5829. DOI: 10.1007/s11127-007-9235-0 Go to original source...
    9. JOHANSSON, A., HEADY, CH., ARNOLD, J., BRYS, B., VARTIA, L., 2008: Tax and economic growth. [cit. 2009-04-23]. Cited from http://www.olis.oecd.org/olis/2008doc.nsf/linkto/eco-wkp(2008)28.
    10. KARRAS, G., FURCERI, D., 2009: Taxes and growth in Europe. South-Eastern Europe Journal of Economics, 13, 2: 181-204. ISSN 1109-8597.
    11. KING, G., REBELO, S., 1990: Public policy and economic growth. Journal of Political Economy, 98, 5: 126-150. ISSN 0022-3808. DOI: 10.1086/261727 Go to original source...
    12. LEE, Y., GORDON, R. H., 2005: Tax Structure and Economic Growth. Journal of Public Economics, 89, 5-6: 1027-1043. ISSN 0047-2727. DOI: 10.1016/j.jpubeco.2004.07.002 Go to original source...
    13. LEIBFRITZ, W., THORNTON, J., BIBBEE, A., 1997: Taxation and Economic Performance OECD Economics Department Working Papers, No. 176, Paris: OECD Publishing. http://www.oecd.org/eco/publicfinanceandfiscalpolicy/1863834.pdf.
    14. LORETZ, S., 2008: Corporate taxation in the OECD in a wider context. Oxford Review of Economic Policy, 24, 4: 639-660. ISSN 1460-2121. DOI: 10.1093/oxrep/grn035 Go to original source...
    15. MENDOZA, E. G., RAZIN, A., TESAR, L. L., 1994: Effective tax rates in macroeconomics. Journal of Monetary Economics, 34, 3: 297-323. ISSN 0304-3932. DOI: 10.1016/0304-3932(94)90021-3 Go to original source...
    16. MYLES, G. D., 2009: Economic Growth and the Role of Taxation - Theory. OECD Economics Department Working Papers, No. 713, OECD publishing. Available online: http://www.oecd-ilibrary.org/docserver/download/5ksf3jjb2j36.pdf?expires=1369227767&id=id&accname=guest✓sum=E88466F856B18B3427D509B992B63B6B.
    17. NORDHAUS, W. D., BOYER, J., 2000: Warming the World: Economic Modeling of Global Warming. Cambridge: MIT Press, 232 pp. ISBN 9780262140713. Go to original source...
    18. PLOSSER, C. I., 1992: The search for growth. Cited from http://www.kansascityfed.org/publicat/sympos/1992/s92ploss.pdf.
    19. PRAMMER, D., 2011: Quality of taxation and the crisis: tax shifts from a growth perspective. Taxation Papers, No. 29, Luxembourg: Office for Official Publications of the European Communities. Available online: http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_29_en.pdf.
    20. ROMERO-ÁVILA, D., STRAUCH, R., 2008: Public finances and long-term growth in Europe: Evidence from a panel data analysis. European Journal of Political Economy, 24, 1: 172-191. ISSN 0176-2680. DOI: 10.1016/j.ejpoleco.2007.06.008 Go to original source...
    21. SLEMROD, J., 1995: Involvement, prosperity, and economic growth? Brookings Papers on Economic Activity, 26, 2: 373-431. ISSN 1057-8641. DOI: 10.2307/2534615 Go to original source...
    22. SZAROWSKÁ, I., 2011: Changes in taxation and their impact on economic growth in the European Union. Acta Univ. Agric. et Silvic. Mendel. Brun., 59, 2: 325-332. ISSN 1211-8516. Go to original source...
    23. The Global Competitiveness Report 2012-2013: Full Data Edition, 2012. SCHWAB, K. (Ed.). Geneva: World Economic Forum, 527 pp. ISBN 978-92-95044-35-7.
    24. VERMEENDE, W., PLOEG, R., TIMMER, J. W., 2008: Taxes and the economy: A Survey on the Impact of Taxes on Growth, Employment, Investment, Consumption and the Environment. Cheltenham (UK): Edward Elgar Publishing, 504 pp. ISBN 9781847201157. Go to original source...
    25. ZIPFEL, F., HEINRICHS, C., 2012. The impact of tax systems on economic growth in Europe. [cit. 2013-01-23]. Cited from http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000295266.pdf.

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content