EU: Report on tax reform

EU: Report on tax reform

The European Commission today released a report that summarizes tax reform in EU Member States and that identifies certain challenges including: (1) the design of housing taxation systems; (2) preferential treatment of debt in corporate income taxation; (3) tax compliance particularly with respect to value added tax (VAT); (4) efficiency of tax administrations; and (5) improving fairness.

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The report (posted on the EC website) presents an overview of recent tax reforms in the EU Member States and provides an indication of performance in major areas of tax policy and the following areas of efficiency: 

  • Lower the tax burden on labour—which is relatively high in the EU. Reducing this burden, particularly for specific groups such as low-income earners would have positive consequences for many EU Member States. Lower labour taxes would need to be compensated by increases in other sources of revenue taxes that are less detrimental to growth, such as taxes on consumption, recurrent taxes on immovable property, and environmental taxes or by a reduction in public spending.
  • Broaden the tax base—a tax system founded on broader tax bases and lower rates is generally more efficient than a system characterised by narrow bases and higher rates.
  • Address tax evasion—boosting transparency, cooperation and exchange of information among countries is vital.

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