Reliance on Consumption Taxes in Europe
2 min readBy:Today’s map highlights the extent to which European countries rely on consumption tax revenue.
Consumption taxes are taxes on goods and services. All European countries levy consumption taxes in the form of Value-Added Taxes (VAT) and excise taxes. In 2017 (the most recent data available), consumption taxes were the largest source of tax revenue in Europe (27 countries covered), at an average of 32.8 percent.
In 2017, Turkey relied the most on consumption tax revenue, at 43.4 percent of total taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. revenue. Estonia had the second highest reliance on consumption taxes, at 42.9 percent, followed by Hungary at 42.5 percent.
Switzerland relied the least on consumption taxes in 2017, at 22.3 percent of total tax revenue. Belgium and Luxembourg followed, both at 24.3 percent of total tax revenue.
As the following table shows, the VAT accounted on average for approximately two-thirds of all consumption taxA consumption tax is typically levied on the purchase of goods or services and is paid directly or indirectly by the consumer in the form of retail sales taxes, excise taxes, tariffs, value-added taxes (VAT), or an income tax where all savings is tax-deductible. revenue in 2017. Excise taxes and other taxes on goods and services accounted for the remaining third.
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Source: “OECD Global Revenue Statistics Database,” https://stats.oecd.org/Index.aspx?DataSetCode=RS_GBL. Note: Individual items may not sum to total due to rounding. (a) For Greece, only the aggregate Taxes on Goods and Services was available for the year 2017. To split this aggregate into the two subcategories VAT and Excise Taxes and Other Taxes on Goods and Services, each subcategory’s average share of the three previous years (2014-2016) was used to weigh it. |
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| Total Consumption Taxes (Share of Total Tax Revenue) | VAT (Share of Total Tax Revenue) | Excise Taxes and Other Taxes on Goods and Services (Share of Total Tax Revenue) | |
|---|---|---|---|
| Austria | 28.2% | 18.3% | 9.8% |
| Belgium | 24.3% | 15.3% | 9.0% |
| Czech Republic | 32.9% | 22.0% | 10.9% |
| Denmark | 31.9% | 20.7% | 11.2% |
| Estonia | 42.9% | 27.6% | 15.3% |
| Finland | 32.8% | 21.0% | 11.8% |
| France | 24.4% | 15.3% | 9.2% |
| Germany | 26.2% | 18.4% | 7.8% |
| Greece (a) | 39.1% | 20.3% | 18.8% |
| Hungary | 42.5% | 24.5% | 18.0% |
| Iceland | 33.3% | 23.3% | 10.0% |
| Ireland | 32.5% | 19.8% | 12.8% |
| Italy | 28.4% | 14.9% | 13.5% |
| Latvia | 41.4% | 26.5% | 14.9% |
| Lithuania | 38.5% | 26.5% | 12.0% |
| Luxembourg | 24.3% | 16.0% | 8.4% |
| Netherlands | 29.1% | 17.5% | 11.6% |
| Norway | 31.1% | 22.3% | 8.8% |
| Poland | 34.4% | 22.5% | 11.9% |
| Portugal | 39.8% | 25.0% | 14.7% |
| Slovak Republic | 33.4% | 21.3% | 12.1% |
| Slovenia | 38.6% | 22.3% | 16.3% |
| Spain | 29.1% | 19.1% | 10.0% |
| Sweden | 28.0% | 21.1% | 6.9% |
| Switzerland | 22.3% | 12.8% | 9.5% |
| Turkey | 43.4% | 20.1% | 23.4% |
| United Kingdom | 31.5% | 20.4% | 11.1% |
| Average | 32.8% | 20.5% | 12.2% |
Reliance on VAT was highest in Estonia (27.6 percent), and Latvia and Lithuania (26.5 percent).
Switzerland relied the least on VAT revenue, at 12.8 percent. This is partially because Switzerland has the lowest VAT rate of all countries covered, at only 7.7 percent, compared to an average of 21.3 percent. Italy (14.9 percent) and France (15.3 percent) were next lowest.
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SubscribeNote: This is part of a map series in which we examine tax revenue sources in Europe.