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Journal of Competitiveness

The Hierarchical Clustering of Tax Burden in the EU27

Šimková Nikola

hierarchical clustering, implicit tax rate on capital, tax burden, tax system, the EU27

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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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

Journal of Competitiveness


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ISSN 1804-171X (Print); eISSN 1804-1728 (On-line)

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