Monday

23rd Jul 2018

Tax property not work, governments told

  • Should governments tax wealth or work? (Photo: Valentina Pop)

Governments should tax property and consumption ahead of income according to the Commission's 2013 Annual Growth Survey published on Wednesday (28 November).

Tax framework should be revised to provide "more incentive for workers to work and employers to employ" and government should reduce "the burden on the most vulnerable."

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

"The tax burden on labour should be substantially reduced in countries where it is comparatively high and hampers job creation," it concludes.

Meanwhile, "taxes such as consumption tax, recurrent property tax and environmental taxes could be increased" to compensate for lower income tax revenues.

The value of property and assets has risen far quicker than incomes across Europe. However, consumption taxes on everyday items such as food, utility bills and petrol disproportionately hit people on lower wages.

Tax on property could be used to control booms in the housing market with the Commission stating that "the favourable tax treatment of mortgages is regarded as one of the contributing factors to over-investment in real estate and the housing market bubble".

According to Commission research, nine EU countries in particular, including France, Germany and Italy, should do more to rebalance their tax system.

Releasing the paper, Economic and Monetary Affairs Commissioner Olli Rehn said that governments had "taken great strides to clear the long backlog of legal and regulatory obstacles to a more dynamic economy. This momentum must be maintained and stepped up".

The Commission has no powers to change national tax policies but has proposed changes, by tabling legislation for a tax on financial transactions that eleven member states are set to apply, as well as revising the VAT system and promoting a common corporate tax base.

The paper is the third annual report on the state of the eurozone economy under the European Semester, agreed by member states in 2010. Although average budget deficit levels are projected to have fallen from over 6 percent in 2010 to marginally over 3 percent, the eurozone economy has fallen back into recession in 2012. Meanwhile, government debt levels are expected to climb to 94.5 percent in 2014 across the EU.

The Commission paper accepts that the austerity budgets being implemented across much of Europe have weakened economic performance, commenting that "fiscal consolidation may have a negative impact on growth in the short term."

"This effect is likely to be stronger during financial crises when financing conditions for other economics actors are also tight."

It also claims that fiscal consolidation programmes between 2009 and 2012 saw public spending fall by 2 percent and tax revenue rise by 1.3 percent.

The EU executive is expected to announce proposals to tackle youth unemployment on 5 December including a guarantee of work, training or further education to under 25 year-olds within four months of them leaving formal education. The scheme is set to be funded by the European Social Fund. Unemployment in the EU grew by 2 million to 25 million in 2012 and stands at 11 percent across the EU, with youth unemployment over 20 percent and as high as 50 percent in Spain and Greece.

The Annual Growth Survey (AGS) will now be discussed by national governments ahead of the March 2013 summit where its main recommendations will be fed into the individual 'national reform plans' for each EU country.

Youth unemployment risks 'social disaster'

The rise in youth unemployment in some member states could pose a “serious threat to social cohesion,” the European Commission warned Friday.

Commission - EU must combat €1tn tax dodging

EU countries must apply common tax rules to combat tax havens and loopholes allowing businesses to avoid corporation tax, according to new proposals released on Thursday by the European Commission.

Analysis

Will Austria's presidency give EU a populist push?

As Sebastian Kurz's government takes over the helm of EU-policy making for the next six months, Austrian MEPs from opposing sides weigh in on the EU's youngest prime minister's possible influence on the continent's future.

News in Brief

  1. Greece FM warns of Russian interference in Balkans
  2. Minister: No Franco-German disagreement on US tariffs
  3. UK Brexit minister warns of 'no-deal' preparations
  4. Munich: large protest against CSU's anti-migration line
  5. Libyan PM rejects EU migrant camps idea
  6. Italy's Salvini to sue critical anti-mafia writer
  7. EU countries send aircraft to Sweden to help with wildfires
  8. British ex-commissioner's jobs called into question

Stakeholders' Highlights

  1. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Mission of China to the EUChina: Work Together for a Better Globalisation
  7. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  8. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  9. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  10. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  11. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  12. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs

Latest News

  1. EU will be blamed for no-deal Brexit, UK minister tells Berlin
  2. Far-right Bannon to open EU campaign group
  3. Russia sanctions: test of EU commitment to international law
  4. Malta's PM cleared of Panama Papers wrongdoing
  5. EU wants answers to de-dramatise Brexit talks
  6. Juncker White House trip trumps the agenda This WEEK
  7. Italian populists try to sink EU migrant mission
  8. EU urges no-deal Brexit preparation

Join EUobserver

Support quality EU news

Join us