The taxation systems vary between Member States. However, there are some common features. The largest share is raised by labor taxation, which represented 21.5% of total EU GDP in 1995. Increasing taxation of labor plays also a role in the high and persistent unemployment in Europe. This general trend has not changed since the publication of the Commission's White Paper on Growth, Competitiveness and Employment, which recommended a reduction in taxation of labor by 1 or 2% of GDP. In order to progress, some countries want to reduce labor taxation and increase other taxes. The Fifth Environmental Programme "Towards Sustainable Development" follows this idea and calls to increase taxation of environmentally damaging activities and reduce taxation of labor and investments. Experience shows, however, that this recommendation is not easy to implement in practice and effects on unemployment may not be huge.

Eurostat - the statistical office of the EU has published a statistical document entitled "The Structure of the Taxation System in the European Union". The purpose of this publication is to interpret fiscal trends in order to provide a general picture of the evolution of taxation systems in Europe at different levels of aggregation, and, to monitor if and how Member States follow the recommendations of the White Paper.

The publication is divided into four main parts. The summary in Chapter II gives an overview of the evolution of taxation system in the European Union and particular Member States in the period 1970 to 1995. Chapter III focuses on the methodology on which the information and data of the report is based. A country analysis of each Member State is provided in Chapter IV. Four different tables are presented for each country:

1. standard split of taxation according to direct, indirect taxes and social contributions;
2. a breakdown of taxation according to receiving governmental level;
3. a breakdown of taxation according to economic function; and,
4. the economic burden of taxation in the form if implicit tax rates.

Chapter V presents the results of the analysis in the form of cross-country tables which allow comparison of data between countries.

The report also covers environmental and energy taxes. According to the applied methodology, environmental taxes aim at integrating external costs, which derive from consumption of the environment, into the private costs of economic agents. They vary from emission or product levies, through certain registration duties to fees. In some cases, the environmental aspect is incorporated to other forms of taxation (e.g. VAT), where it is a part of the discriminatory function of the whole tax, i.e. influencing against the use of such goods or against such activities. Energy taxes are imposed on energy sources (petroleum products, coal, etc.) or on the use of energy.

The overall fiscal importance of environmental taxes is rather low in most Member States. In 1995, revenues from environmental taxes represented 0.7% of EU GDP and 1.7% of total tax revenues in the EU. Only in the Netherlands (5.8% of total taxation) and in Denmark (4.3% of total taxation) environmental taxes are on larger scale, in both cases as a result of comparatively high taxes on the use of cars.

The taxation of energy has only slightly increased since 1970. In 1995, revenues from taxes on energy were 2.2% of EU GDP and 5.2% of total tax revenues in EU. Countries with comparatively high share of energy taxes in total taxation are Portugal (8.4%), Italy (7.7%) and Luxembourg (7.0%). The most important energy taxes are excise duties on mineral oils.

Some more detailed information from the report on environmental and energy taxes in EU countries are presented in the supplement at the end of this newsletter.

Eurostat (1997): Structures of the Taxation System in the European Union, 1970-95. Statistical Document of the Eurostat. 111pp. price excluding VAT ECU 10. To order contact: Office for Official Publications of the European Communities in Luxembourg or country sales offices. Additional information is available on http:/europa.eu.int

Environmental Taxes in the European Union, 1995

Taxes on Energy in the European Union, 1995

Source: Eurostat (1997): Structures of the Taxation Systems in the European Union 1970-95. European Communities, Brussels.