TAX BURDEN MANAGEMENT AND GDP GROWTH: CASE OF EU COUNTRIES

Abstract

Tax system is an object of various scientific debates. The challenging question for centuries is determination of the optimal level of tax, which ensures possibilities of social development, quality of common welfare, and favorable business development. The effectiveness of tax system is an important factor of creation of national economic potential. Tax system itself in turn is a complicated set of provisions and standards, and economic condition of every country is being influenced by various circumstances. Therefore the issue of tax system optimization is ever so interesting scientifically and practically.

The objective of the research is to analyze the nature of interdependence of GDP variation and tax burden in EU countries and to determine, how the results of tax system’s modification do influence GDP of countries with different level of economic development. Statistical data of 1995-2007 were used in this research. The strength of relation is being determined by Spearman correlation coefficient; cluster analysis is used in order to evaluate the similarities of changes of tax system and GDP growth in EU countries.