Belfast Telegraph

Wednesday 30 July 2014

Grass is greener in Republic with one of the lowest tax regimes in EU

Nothing is certain in life except death and taxes.

But Northern Ireland's nearest neighbour has one of the lowest tax regimes in Europe.

In its 2011 tax report released on Monday, Europe's statistics agency identified Denmark as having the highest tax burden in the European Union, with income equivalent to 47.7% of the country's annual output.

The next three spots were taken by Sweden, Belgium, France and Finland, all with tax takes of just above or just below 44%, the figures showed.

But the Republic, which was bailed out by the EU in 2011, also has one of the lowest tax burdens at just under 29%, although a new property tax to be introduced later this year is likely to change that.

Below that was Lithuania, which collected just 26% of its economic output in taxes while others with receipts of less than 30% include Bulgaria, Latvia, Romania and Slovakia.

Zsolt Darvas, an economist at think-tank Bruegel, explained the divergences by way of the differing economic models and socio-political systems EU states have adopted.

"Europe has different tax models, with countries like Ireland pursuing an Anglo-Saxon approach of low investment in public services and a low tax burden, while Scandinavia offers more public services for a higher tax," he said.

While the tax burden may be high in northern Europe, the figures show the trend is downwards. Denmark's tax take is down from 49.4% in 2000, while Sweden's has dropped from 51.5% to 44.3% in the past 11 years.

The average across the EU has also fallen marginally over that time, with revenue dropping to 38.8% of GDP in 2011 from 40.4% in 2000.

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