Taxation of Consumption, Labour and Capital in European Union Countries

Abstract

The aim of this article is to present long-term trends regarding taxation of consumption, labour and capital in European Union countries, with particular emphasis on the specific features of tax policy in Poland. Based on statistical data from the European Commission and the OECD for the 1995-2016 period and a review of the literature, an attempt was made to verify the following hypotheses: 1. In the face of a financial crisis, government revenues from taxes fell, and the main burden of mitigating the budget deficit rested with consumption taxes. 2. Despite numerous changes in the taxation of labour in the European Union, the share of personal income tax and social security contributions in budget revenues was at a similar level. 3. Tax competition initiated by new EU members and the need to stimulate an economic recovery after the crisis meant that economic operators were less involved in supplying budget revenues from taxes. 4. Tax policy in Poland differs significantly from those in Western European countries and shows many features typical of countries with a “southern” tax approach. The analysis confirmed the hypotheses, at least partially. At the same time, it indicates that the tax systems of European Union countries are diverse. Therefore, the conclusions must be carefully formulated. This particularly applies to taxpayers referred to as self-employed because they constitute a heterogeneous category. According to Eurostat statistics, their income is treated as capital income, while in Poland a significant part of this can be treated as income from work.

Keywords

• taxes
• crisis
• tax wedge
• poland
• european union