The Hierarchical Clustering of Tax Burden in the EU27
Šimková Nikola
Keywords:
hierarchical clustering, implicit tax rate on capital, tax burden, tax system, the EU27
Abstract:
The issue of taxation has become more important due to a significant share of the government
revenue. There are several ways of expressing the tax burden of countries. This paper describes
the traditional approach as a share of tax revenue to GDP which is applied to the total taxation
and the capital taxation as a part of tax systems affecting investment decisions. The implicit tax
rate on capital created by Eurostat also offers a possible explanation of the tax burden on capital,
so its components are analysed in detail. This study uses one of the econometric methods called
the hierarchical clustering. The data on which the clustering is based comprises countries in the
EU27 for the period of 1995 – 2012. The aim of this paper is to reveal clusters of countries in
the EU27 with similar tax burden or tax changes. The findings suggest that mainly newly acceding
countries (2004 and 2007) are in a group of countries with a low tax burden which tried to
encourage investors by favourable tax rates. On the other hand, there are mostly countries from
the original EU15. Some clusters may be explained by similar historical development, geographic
and demographic characteristics.
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10.7441/joc.2015.03.07
Šimková N. (2015).
The Hierarchical Clustering of Tax Burden in the EU27. Journal of Competitiveness, 7 (3), 95-109 https://doi.org/10.7441/joc.2015.03.07
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