1. European Commission Taxation and Customs Union 2011 edition of the ‘Taxation Trends’ report Marco Fantini Head of Section « Quantitative analysis of taxation « DG TAXUD

2. 2 European Commission Taxation and Customs Union The impact of the crisis on GDP growth

3. 3 European Commission Taxation and Customs Union -2.8% -1.7% -1.9% -2.3% -3.7% -4.7% -5.3% -8.2% 1.7% -13.9% -18% -14.7% -6.7% -4.8% -4.1% -4.9%-7.6% -3.7% -2.6% -5% -7.1% -4.9% -3.9% -2.5% -8.1% -3.9% -5.2% Real GDP Growth Rate, 2009 > 0 -3 ≤ 0 -5 ≤ -3 -10 ≤ -5 ≤ -10

4. 4 European Commission Taxation and Customs Union Top 6 and bottom 6 growth rates

5. 5 European Commission Taxation and Customs Union The impact of the crisis on public finances

6. 6 European Commission Taxation and Customs Union Change in budget balance (2008-2009) Average revenue drop: 0.6% of GDP Average expenditure increase: 4% of GDP

7. 7 European Commission Taxation and Customs Union Trends in the overall tax ratio 2000-2009, in % of GDP Drop: 3.8 %

8. 8 European Commission Taxation and Customs Union Excluding social security contributions, the revenue drop looks even stronger Drop: 6.8%

9. 9 European Commission Taxation and Customs Union Time trend for tax ratio, actual and adjusted for the cycle

10. 10 European Commission Taxation and Customs Union The tax policy reaction

11. 11 European Commission Taxation and Customs Union Budgetary impact of tax measures by type of measure, 2009 Revenue-raising measures Tax-cutting measures

12. 12 European Commission Taxation and Customs Union -2.8%-2.8% 15% 18% 19% 15% 19% 25% 22% 20% 21% 19% 25% 19% 15%21.5% 16% 19.6% 20% 19% 20% 19% 25% 2009: Change in VAT rate since 2008 No change Increase Decrease 21%

13. 13 European Commission Taxation and Customs Union -2.8%-2.8% 15% 18% 23% 15% 19% 25% 23% 22% 20% 21% 25% 19% 20% 17.5%21% 18% 19.6% 20% 24% 20% 21% 20% 19% 25% 2010: Change in VAT rate since 2008 No change Increase Decrease 21%

14. 14 European Commission Taxation and Customs Union -2.8%-2.8% 15% 18% 23% 15% 19% 25% 23% 20% 22% 21% 25% 20% 21% 18% 19.6% 20% 24% 20% 23% 20% 19% 25% 2011: Change in VAT rate since 2008 No change Increase Decrease 21%

15. 15 European Commission Taxation and Customs Union VAT standard rates have been hiked strongly as a result of the crisis Revenue data stop here

16. 16 European Commission Taxation and Customs Union Substantial recourse to excise duties to raise revenue Excise Duties Energy productsTobacco & alcoholBudgetary impact (% of GDP) 2009 IncreaseEE, GR, HU, LV, LT (2009-2011), RO, SI, ES FI, HU, LV, LT (2009-2011), RO, SI, ES EE: 0.1; GR: 0.13; HU: 0.1; LV: 0.9; LT: 0.7 (2009-2011); SI: 0.71; ES: 0.05 (2009), 0.04 (2010) DecreaseIT, LT (2009-2011) 2010 - IncreaseBG, CZ, DK, EE, GR, HU, LV, SI BG, CY, CZ, DK, EE, FI, GR, HU, LV, PL, SI BG: 0.34; DK: 0.4; EE: 0.8 (2010), 0.02 (2011); GR: 1.5; HU: 0.3; LV: 0.09 DecreasePL, SK PL: -0.07; SK: -0.02

17. 17 European Commission Taxation and Customs Union Crisis has not reversed, but possibly slowed, the steep decline in corporate tax rates Development of statutory CIT rate (adj.)

18. 18 European Commission Taxation and Customs Union The average decline in PIT rates has stopped Note: Including local taxes and surcharges

19. 19 European Commission Taxation and Customs Union Trend to reduce labour taxes for low-income earners continues Tax wedge on labour for worker at 2/3 of average earnings

20. 20 European Commission Taxation and Customs Union Trends in environmental tax revenues, 2000-2009, % of GDP

21. 21 European Commission Taxation and Customs Union Tax revenue per unit of energy used, deflated 2000-2009, % of GDP

22. 22 European Commission Taxation and Customs Union Summing up REVENUES Sharp decline in tax revenues in 2009, due to recession To fight the recession, Member States relied more on expenditure increases than tax cuts, … but even at the height of the crisis, a number of Member States were able to introduce tax cuts, and these focussed on labour taxes Energy tax revenues and ITRs on Energy up in 2009, breaking long trend RATES Clear trend towards increases in indirect taxes, right up to present Corporate tax rates seem to be stabilising Average top PIT rates pick up in euro area, decline slightly in EU average

23. 23 European Commission Taxation and Customs Union Additional information The full report and a booklet with the main results are available at the following address: http://ec.europa.eu/taxtrends Thank you!