Tax revenue in the European Union

The economic and financial crisis, together with fiscal policy measures adopted in the Member States, started to have an impact on tax revenue. In 2008, EU-27 general government tax revenue (including social contributions) fell to 40.5% of GDP, accounting for over 90% of total government revenue. The decline was more marked in the euro area (EA-16), where the ratio fell from 41.5% in 2007 to 40.9% in 2008. The growth of both tax revenue and nominal GDP, in absolute terms, slowed in 2008, recording the lowest increases in both EU-27 and EA-16 over the period 1998-2008. Denmark and Sweden registered the highest tax-revenue-to-GDP ratios in 2008, around half of their GDP, although the ratios fell compared to 2007. By contrast, lower levels were generally observed in the countries that have joined the EU since 2004. The fall of the tax revenue-to-GDP ratio in the EU-27 during 2008 followed an increase of 0.8 percentage points between 2004 and 2007 (the 2004 level being the lowest value recorded over the period 1998-2008).