Tax revenue in the European Union

EU-27 tax revenue (including social contributions) of general government stabilised in 2007 at 40.9% of GDP, accounting for over 90% of total government revenue. In the euro area (EA-16), on the other hand, tax revenue increased slightly, reaching 41.6% of GDP in 2007. Denmark and Sweden registered the highest levels of tax revenue, amounting to around half of their GDP in 2007, while generally lower levels were observed in the new EU Member States (those that have joined the EU since 2004). The ratio of tax revenue to GDP in the EU-27 in 2007 was 0.8 percentage points higher than its low of 40.1% in 2004. The increase recorded in recent years was not strong enough to restore the ratio to its 1999 level (see Figure 1). During the past nine years, Member States experienced different movements in the level of tax revenue. The largest increases were observed in Cyprus (from 28.0% in 1999 to 41.6% in 2007) and Malta (from 28.7% to 36.1%), while the biggest reduction was recorded in Slovakia (from 35.5% to 29.7%). EU-27 tax revenue in 2007 was almost equally split between taxes on production and imports (33.8%), social contributions (33.1%) and current taxes on income, wealth, etc. (32.7%). In the new EU Member States there is generally less reliance on direct taxes as a form of government revenue than in the EU-27 as a whole.