Cyprus saw EU’s big­gest in­crease in tax to GDP ra­tio

Financial Mirror (Cyprus) - - CYPRUS -

Cyprus recorded the largest in­crease in its tax-to-GDP ra­tio out of the 28-mem­ber bloc ris­ing from 32.9% in 2016 to 34% in 2017, Euro­stat data shows. To­tal rev­enue from taxes and so­cial con­tri­bu­tions as per­cent­age of GDP in Cyprus in­creased from 28% in 2002, to 36.1% in 2007, it was 31.6% in 2012, 33.3% in 2015 and 32.9% in 2016.

In 2017 the 34% break­down is: 15.9% from taxes on pro­duc­tion and im­ports, 9.5% from VAT, 9.4% from taxes on in­come, wealth, etc. (out of which 3.1% form taxes on in­di­vid­ual or house­hold in­come, 5.7% from taxes on the in­come or prof­its of cor­po­ra­tions) and 8.7% from net so­cial con­tri­bu­tions. Af­ter Cyprus, came Lux­em­bourg (from 39.4% to 40.3%) and Slo­vakia (from 32.4% to 33.2%).

The largest de­crease was in Hun­gary while the tax-to-GDP ra­tio in­creased in 15 Mem­ber States in 2017.

De­creases were recorded in 13 Mem­ber States, no­tably in Hun­gary (from 39.3% in 2016 to 38.4% in 2017), Ro­ma­nia (from 26.5% to 25.8%) and Es­to­nia (from 33.8% to 33.0%).

The over­all tax-to-GDP ra­tio, mean­ing the sum of taxes and net so­cial con­tri­bu­tions as a per­cent­age of Gross Do­mes­tic Prod­uct, stood at 40.2% in the Euro­pean Union in 2017, while in 2016 it stood at 39.9%. In the euro area, tax rev­enue ac­counted for 41.4% of GDP in 2017, slightly up from 41.2% in 2016.

The tax-to-GDP ra­tio varies sig­nif­i­cantly be­tween Mem­ber States, with the high­est share of taxes and so­cial con­tri­bu­tions in per­cent­age of GDP in 2017 be­ing recorded in France (48.4%), Bel­gium (47.3%) and Den­mark (46.5%), fol­lowed by Swe­den (44.9%), Fin­land (43.4%), Aus­tria and Italy (both 42.4%) as well as Greece (41.8%).

At the op­po­site end of the scale, Ire­land (23.5%) and Ro­ma­nia (25.8%), ahead of Bul­garia (29.5%), Lithua­nia (29.8%) and Latvia (31.4%) reg­is­tered the low­est ra­tios.

In 2017, taxes on pro­duc­tion and im­ports made up the largest part of tax rev­enue in the EU (ac­count­ing for 13.6% of GDP), closely fol­lowed by net so­cial con­tri­bu­tions (13.3%) and taxes on in­come and wealth (13.1%). The or­der­ing of tax cat­e­gories was slightly dif­fer­ent in the euro area.

The largest part of tax rev­enue came from net so­cial con­tri­bu­tions (15.2%), ahead of taxes on pro­duc­tion and im­ports (13.2%) and taxes on in­come and wealth (12.8%).

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

The share of taxes on pro­duc­tion and im­ports was high­est in Swe­den (where they ac­counted for 22.7% of GDP), Croa­tia (19.6%) and Hun­gary (18.2%), while they were low­est in Ire­land (8.5%), Ger­many (10.7%) and Slo­vakia (11.1%).

For taxes re­lated to in­come and wealth, the high­est share by far was reg­is­tered in Den­mark (29.7% of GDP), ahead of Swe­den (18.9%), Bel­gium (16.9%) and Fin­land (16.6%).

In con­trast, Lithua­nia (5.4%), Bul­garia (5.7%), Ro­ma­nia (6.1%) and Croa­tia (6.3%) recorded the low­est taxes on in­come and wealth as a per­cent­age of GDP.

Net so­cial con­tri­bu­tions ac­counted for a large pro­por­tion of GDP in France (18.8%), Ger­many (16.7%) and Bel­gium (16.1%), while the low­est shares were ob­served in Den­mark (0.9%) and Swe­den (3.3%).

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