FISCAL PRESSURE IN THE EU: AN ECONOMETRIC APPROACH

Abstract

This article assesses the impact of fiscal pressure through the relationship between direct taxes, indirect taxes and taxes received by the central government as a percentage of GDP, and personal income tax rates, corporate income tax rates and value added taxes using a country sample that includes members of the EU-28, Iceland and Norway. Empirical analyses use annual data from 2004 to 2016 and employ techniques to account for possible linear effects in fiscal policy actions. Results show that for all countries considered in the analyses there is a strong relationship between dependent variables and independent variables in four econometric models.

Keywords

• taxation; direct taxes; GDP; income tax; corporate tax