This report analyses i.a. potential challenges that Member States are currently facing in areas of taxation where policy is expected to have an impact on macro-economic performance in terms of GDP, employment and fiscal sustainability, and may impact macro-economic stability.
The report first presents tax reforms implemented in EU Member States in 2012 and the first half of 2013. Second, it discusses selected tax policy challenges that are relevant for improving Member States' tax systems. These challenges encompass the potential contribution of taxation to consolidate public finances – in addition to expenditure control – and the growth-friendliness of the tax structure, which are particularly relevant dimensions in times of slow growth and fiscal consolidation.
The report also examines economic challenges related to the design of individual taxes and tax compliance. In particular, it deepens the analysis of tax expenditure with particular insights on personal income taxation and examines the debt bias in corporate taxation. Applying an indicator-based approach, it also provides an update of the analysis on VAT, housing taxation, environmental taxation and improving tax governance. Finally, it analyses the influence of taxation on income inequality.
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