EUROPEAN PROPERTY TAXATION: NEW SOURCES OF REVENUE, CASES OF THE EU COUNTRIES

Abstract

The focus of this article is on the effects of taxation and tax reforms on GDP and on sustainable economic growth. Property taxes are an ancient form of taxation and have commonly been recognised as meeting at least some of the tests for a good tax system. A tax shift from taxation of labour to other sources less detrimental to growth, making work pay, could help increase the employment rate. Reduction in the tax burden on labour should be targeted to these specific groups facing high disincentives to work. The scope for tax shifting is assessed through the relatively low level of indirect taxation, in particular consumption taxes and recurrent taxes on housing, which are supposed to generate less economic distortions than other revenue sources. The fact that real estate taxes are quite low in many EU countries create the opportunity for these countries to obtain a convenient inexpensive and short term solution, and increasing them may offer treasuries a convenient funding solution already in the short term, given the need in many countries to find new sources of revenue. At the same time, improving the growth-friendliness of the overall structure of taxation is an important element of the universal challenge to enhance the growth potential of the EU economies. While growth is a goal per se it is also a condition for making public finances sustainable.

DOI: http://dx.doi.org/10.5755/j01.em.18.3.4187