EC calls for taxation shift from labour to environment

“To   sustain   fiscal   consolidation,   several   Member   States   are   raising   taxes.   The  Commission has called for a shift in taxation away from labour towards environmentally-harmful practices, consumption and real estate, while ensuring that the burden does not fall  disproportionately  on  the  poorest  sections  of  society.  While a  number  of  Member States have significantly increased consumption taxes and started to reverse the decline in environmental taxation, there is no evidence of an overall reduction in labour taxation.”

Of particular interest is the conclusion that Spain’s “Revenue from environmental taxes was the lowest in the EU in 2010 (as a percentage of GDP)”. To counteract this, the Commission recommends that Spain “Introduce a taxation system consistent with the fiscal consolidation efforts and more supportive to growth, including a shift away from labour towards consumption and environmental  taxation.  In  particular,  address  the  low  VAT  revenue  ratio  by broadening the tax base for VAT. Ensure less tax-induced bias towards indebtedness and home-ownership (as opposed to renting).”

Sources: EC-Country specific recommendations, Commission report ACTION FOR STABILITY, GROWTH AND JOBS.

Last modified onThursday, 04 May 2017 17:04
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