Tuesday

23rd May 2017

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."

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"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.

Schulz fails to beat Merkel in German home state

Former EU parliament leader, Martin Schulz, says the defeat of his social-democrats in North Rhine-Westphalia is "difficult". The elections showed that a "Schulz effect" does not (yet) exist.

Austria heading for snap elections

Foreign minister Kurz has taken leadership of the conservative party in what could lead to an alliance with the far-right.

Stakeholders' Highlights

  1. UNICEFChild Alert on Myanmar: Fruits of Rapid Development yet to Reach Remote Regions
  2. Nordic Council of MinistersBecome an Explorer - 'Traces of Nordic' Seeking Storytellers Around the World
  3. Malta EU 2017Closer Cooperation and Reinforced Solidarity to Ensure Security of Gas Supply
  4. European Healthy Lifestyle AllianceHigh-Intensity Interval Training Is Therapeutic Option for Type 2 Diabetes
  5. Dialogue Platform"The West Must Help Turkey Return to a Democratic Path" a Call by Fethullah Gulen
  6. ILGA-EuropeRainbow Europe 2017 Is Live - Which Countries Are Leading on LGBTI Equality?
  7. Centre Maurits CoppietersWhen You Invest in a Refugee Woman You Help the Whole Community
  8. Eurogroup for AnimalsECJ Ruling: Member States Given No Say on Wildlife Protection In Trade
  9. European Heart NetworkCall for Urgent Adoption of EU-Wide Nutrient Profiles for Nutrition & Health Claims
  10. Counter BalanceInvestment Plan for Europe More Climate Friendly but European Parliament Shows Little Ambition
  11. Mission of China to the EUPresident Xi: China's Belt and Road Initiative Benefits People Around the World
  12. Malta EU 2017EU Strengthens Control of the Acquisition and Possession of Firearms