Tax systems and tax reforms in Europe: Rationale and open issue for more radical reforms



Countries were left at the starting post: fiscal pressure did not increase, nor was its structure
dramatically changed. Med club countries marked the main change. The total fiscal pressure
of the European development newcomers
7 increased by about 10-15 points. Tax structure
changed markedly in favor of direct (in Spain also indirect) taxes.

2.2. Not enough convergence and narrow reforms: macro and micro issues

Table 2 shows a set of macro-indicators pertaining to tax systems’ convergence in our se-
lected countries, going from 1970 to 1997. As to the simple ratios to GDP, the convergence
processes (by competition or harmonization) seem to have impinged upon direc
t8 and still
more indirect taxes.
9 Neither total taxes nor social contributions show clear signals of conver-
gence. What about tax burden? An analysis by economic functions (i.e. main aggregates of in-
ternal resources or employments, Eurostat 2000) as ratio to their overall value (more or less
the GDP), points out strong evidences of convergence for consumption and far lower for capi-
tal (be aware that “capital” here means all the heterogeneous incomes which constitute operat-
ing surplus in national accounting). Convergence for labor and total fiscal burden seem to
have been almost not existing at all. However different degrees of tax base buoyancy rather
muddy such evidence, thus calling for a closer look at the movement of tax structure as de-
picted by the implicit rates (i.e. the revenues on single factor or employment as a ratio of a na-
tional accounts potential tax basis: Martinez-Mongay 2000). Taxation on labor increased by
almost 50 per cent and at the same time diverged, heterogeneous capital was affected by a
stable rate converging taxation, while for consumption it remained much the

7 Italy adopted a fundamental tax reform in 1972, Spain not many years after (see Italy’s and Spain’s chapters).

8 This has been mainly due to the income tax, whose amount is largely prevailing inside this category. See below
for corporate and capital incomes taxes.

9 Do not forget that in 1970 a true income tax was still not in existence in many European Countries and VAT
was in force only in France.



More intriguing information

1. The Environmental Kuznets Curve Under a New framework: Role of Social Capital in Water Pollution
2. The name is absent
3. Auctions in an outcome-based payment scheme to reward ecological services in agriculture – Conception, implementation and results
4. The name is absent
5. An Attempt to 2
6. The name is absent
7. Improving Business Cycle Forecasts’ Accuracy - What Can We Learn from Past Errors?
8. The bank lending channel of monetary policy: identification and estimation using Portuguese micro bank data
9. Empirically Analyzing the Impacts of U.S. Export Credit Programs on U.S. Agricultural Export Competitiveness
10. The migration of unskilled youth: Is there any wage gain?
11. NATURAL RESOURCE SUPPLY CONSTRAINTS AND REGIONAL ECONOMIC ANALYSIS: A COMPUTABLE GENERAL EQUILIBRIUM APPROACH
12. The name is absent
13. The name is absent
14. The name is absent
15. Nietzsche, immortality, singularity and eternal recurrence1
16. Unilateral Actions the Case of International Environmental Problems
17. Detecting Multiple Breaks in Financial Market Volatility Dynamics
18. The name is absent
19. Knowledge, Innovation and Agglomeration - regionalized multiple indicators and evidence from Brazil
20. La mobilité de la main-d'œuvre en Europe : le rôle des caractéristiques individuelles et de l'hétérogénéité entre pays