The Commission has published the 2011 report ‘Tax reforms in EU Member States: Tax policy challenges for economic growth and fiscal sustainability’ which studies recent trends in tax revenues and tax reforms implemented in Member States.

The report shows that, while tax revenues dropped markedly in 2008 and 2009, they are on the rise again, for cyclical reasons and due to tax increase measures. The report considers that, overall, tax policy in the EU has resulted in a slight contraction in GDP in 2010. Tax measures adopted in the first half of 2011 saw almost all Member States raising tax revenues. In some Member States measures have been taken to amend the tax structure with a view to supporting growth.

The report noted that in Ireland's case, the biggest contribution to consolidation measures in 2011 in terms of revenue comes from income tax with more than € 1.2 billion raised, mainly through the reduction of tax credits (€435 million) and changes in the rate band (€395 million). Both employee's and employer's contributions to social security have been increased, leading to higher revenue of €40 million for each group. For 2011, the change to USC is revenue neutral. The estimated additional annual revenue of the USC is € 420 million in the future.

Tax reform in the United Kingdom over the same period has not been quite as severe, though the report notes the introduction of the 50% income tax rate and the increase in the VAT rate to 20%. The planned reduction to the Corporation tax rate is also highlighted.

The report also found that Ireland, Greece, Spain, Portugal and, to a lesser extent, Luxembourg display tax ratios well below the euro-area average. Borderline cases are Germany and the Netherlands, where the tax burden is only marginally below average. http://ec.europa.eu/economy_finance/publications/european_economy/2011/pdf/ee-2011-5_en.pdf