1. JOANNA PIOTROWSKA & WERNER VANBORREN PRESENTED BY: GEORGES VIVIEN HOUNGBONON The corporate income tax rate-revenue paradox: Evidence in the EU

2. Outlines Preliminaries Outcomes of the study

3. Corporate income tax-revenue paradox? Corporate tax competition within EU. Corporate tax rate decreases from 1994 to 2005 : From 33% to 27%. But corporate income tax revenues relative to GDP has been relatively stable around 3%. Purpose of the article: explain why? (Graph 1)

4. Some reasons given in the litterature First thoughts: data limitations, lack of specific analyses. The specificities of the corporate tax system; Auerbach (2006); Creedy and Gemmell (2007). Corporatization and income shifting; Clausing (2006); Sørensen (2006). Corporate profitability and capital income; Auerbach and Poterba (1987); Douglas (1990); Swiston and al. (2007).

5. Methodology Data from Eurostat on 16 selected EU countries from 1994 to 2005 Decomposition of the ratio : corporate income tax revenues over GDP (R/GDP). Let R = Corporate income tax revenues; C = corporate income and P = Business income According to Sørensen’s formula: R/GDP = (R/C)*(C/P)*(P/GDP)

6. The outcomes of the study at the regional scale R/C = corporate tax level has increased and also decreased. C/P = corporatization has increased by 8,2%. P/GDP = part of business income in GDP has been relatively stable. (Graph 2) Corporatization is the most driven factor of the stability of corporate income tax revenues relative to the GDP in the EU.

7. The outcomes of the study at country scale The three indicators vary differently according to countries. However C/P (share of total business income accruing to the corporate sector) seems to have increased in many countries (table on next slide) Except from Slovakia and Finland respectively where R/GDP has decrease and increased steadily, this ratio has remained stable throughout the period of study. Corporatization is again found to be the driving factor of R/GDP within EU coutries.

8. CountryR/CC/PP/GDP Belgium++- Czech R.-++ Danemark++0 Estonia-++ Spain+-- France++0 Italy-+- Lithuania-+- Netherland-++ Austria+++ Poland-++ Portugal+-- Slovakia--- Finland0++ Sweden++- UK-+0 + : increase- : decrease0: stable Source: Autors’ computations

9. Conclusion Corporatization which is the share of total business income accruing to the corporate sector is the most driving factor of the corporate income tax revenue relative to the GDP evolution both at regional and country level.

10. Thanks for your attention