Author: Seamus Coffey

Taxation Trends in the EU

Eurostat have published a news release with some summary tables of taxation trends in the EU.  The data are taken from the 2013 Statistical Book on the same topic.  The section on Ireland in the book opens with the following summary.

At 28.9 % in 2011, the total tax-to-GDP ratio in Ireland is the sixth lowest in the Union and the second lowest in the euro area. In recent years this ratio gradually decreased from a 2006 high of 32.1 %, but has increased again in 2011, apparently on foot of budgetary measures aimed at raising tax receipts.

The taxation structure is characterised by a strong reliance on taxes rather than social contributions. Direct and indirect taxation make up 43.4 % and 39.4 % of the total revenue in 2011 respectively, whereas the social contributions raise only 17.2 % of total tax revenue. The share of social contributions is the second lowest in the EU. The structure of taxation differs considerably from the typical structure of the EU-27, where each item contributes roughly a third of the total. As in the majority of Member States, the largest share of indirect taxes is constituted by VAT receipts, which provide 54.1 % of total indirect taxes (53.3 % for the EU-27). The structure of direct taxation is similar to that found in the EU-27. The shares of personal income taxes and corporate income taxes are in line with the EU-27 average and represent 9.2 % and 2.4 % of GDP. Social contributions represent a meagre 5 % of GDP (second lowest in the Union after Denmark), compared to an EU-27 average of 12.7 %. Employers’ and employees’ contributions are at 3.5 % and 1.3 % of GDP, respectively.

Ireland is one of the most fiscally centralised countries in Europe; local government has only low revenues (3.5 % of tax revenues). The social security fund receives just 16.4 % of tax revenues (EU-27 37.3%), while the vast majority (79.2 %) of tax revenue accrues to central government. This ratio is exceeded only by Malta and the UK.

EC Winter 2012 Review of Irish Programme

The details of the Commission’s quarterly reviews tend to get into the public domain in draft form a couple of weeks before their official release.  The ninth staff review has now been published.

Government Finance Statistics

The CSO have launched a new series of government finance statistics.  Press release here with links to the releases and datasets here.

Maastricht Returns

Eurostat have published the first notification of government deficit and debt data in the EU for 2012.  The euroarea had an aggregate budget deficit of 3.7% of GDP and an aggregate gross debt of 90.6% of GDP and “Eurostat has no reservations on the data reported by Member States.”

The detailed figures on Ireland are here (all countries  here).  The Department of Finance have released an information note on the Irish figures.

The 2012 deficit is estimated to have been 7.6% of GDP with the gross debt at year end equivalent to 117.6% of GDP.  For 2013, the projections are a deficit of 7.4% of GDP and a year-end debt of 123% of GDP.

The 2012 deficit benefitted from some once-off revenue factors while, in comparison, the 2013 deficit is negatively effected by the end of the ELG, reduced income from assets sold (BOI CoCo notes) and the deficit impact of the ongoing IBRC liquidation.

Reinhart & Rogoff: The Rejoinder

There has been plenty of commentary over the past day or so on  insights into the statistical work undertaken by Reinhart and Rogoff in their paper on growth and debt published in the Papers and Proceedings of the 2010 AEA Annual Meeting. 

Their conclusions on public debt are represented in this chart (below the fold) from the paper, with the subsequent emphasis put on the (slightly) negative average growth rate for countries with a Debt/GDP over 90%.

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