Part I

Overall tax revenue

Graph 1.4: Level in 2000 and change of tax-to-GDP ratio until 2010
in %

O
v
e
r
a
l
l

12
10
8
MT

Changes from 2000 - 2010

CY

t
a
x

EE

2
PT
0

r
e
v
e
n
u
e

AT FR

NL
LU HU

BE
DK

RO
-4

UK
ES

LV
LT

-2

IT

SI

CZ
PL

IE
BG

EL

DE
FI

SE

SK

-6
-8
-10
-12
22

27

32

37

42

47

52

Total taxes in proportion to GDP - Base year 2000

Source: Commission services and Eurostat (gov_a_tax_ag)

Convergence of tax ratios since 2000

interrupted during the crisis
The overall tax ratio tended to converge from the
beginning of the century until 2007, as shown by a
falling ratio between the standard deviation and the
mean. In 2008-2010, however, tax ratios diverged
again, possibly owing to the rather different depth of
the recession among Member States and to the diverse
policy reaction to the crisis.
Graph 1.4 charts, for every country, the changes in the
tax-to-GDP ratios between 2000 and 2010 in
percentage points of GDP, in comparison with their
starting point in the base year 2000. The main purpose
of the graph is to show to what extent countries starting
with a higher than average tax ratio tend to reduce it
over time.
Several facts are highlighted by the graph. First, all
countries, except Italy (and Slovenia although less
pronounced), that had above average tax ratio in 2000
reduced it over the period until 2010. Sweden and
Finland have cut the tax burden significantly since
2000, by 5.6 and 5.1 points respectively. Secondly, the
development of the tax ratio for the group of countries
having below average tax-to-GDP in 2000 is less

22

Taxation trends in the European Union

uniform. Four countries increased their tax ratio, three

of which markedly. The increase in revenue in Cyprus
stands out for its size (5.8 % points of GDP) while
another large increase, 5.4 % points of GDP, took place
in another Mediterranean country, Malta. In Estonia too
the increase was relatively marked at 3.2 % points; it
was almost entirely realised in 2009. Spain, also with
below 2000 average ratio, saw a significant increase in
revenue from 2000 to 2007, over 3 % points of GDP,
but this was more than reversed by the steep drop in
revenue since then, amounting to around 5.2 % points
of GDP. As for reductions, over the entire 2000-2010
period the most remarkable case is Slovakia, which,
after having cut the overall tax ratio by 6.2 % points of
GDP from 1995 to 2000, reduced the tax burden by an
additional six percentage points of GDP after 2000.
Bulgaria, too, reduced significantly its already low tax
ratio by 4.2 points. Lastly, the lack of convergence over
the 2000-2010 period is due predominantly to the fact
that Member States with low tax ratio in 2000
decreased it even further until 2010. In most of the
cases the decline was realised from 2008 onwards, as
the crisis took its toll.