The European Commission’s latest taxation trends report shows tax revenues from environmental and energy taxes were stable in the EU over the last decade while CO2 emissions decreased. However environmental taxes did fall slightly in 2017 to less than 2.5 percent of GDP.

Energy taxes, the main component of environmental taxes, comprised less than 2 percent of GDP in terms of tax revenues in that year. Other tax revenues in the EU as a percentage of GDP have continued their upward trend since 2009.

The report, published annually, also contains data on consumption, labour, capital and property taxation, plus rates for personal and corporate income taxes in each EU Member State.

It contains a detailed statistical and economic analysis of the tax systems of the 28 Member States of the EU, plus Iceland and Norway which are members of the European Economic Area.

In addition to the analysis of Europe-wide trends in Part 1, the report includes in Part 2 country chapters. For each country, key taxation indicators are provided on tax revenues as a percentage of GDP for the years 2005–2017.

UK must settle its bills even if no Brexit deal says EU

The European Commission warned this week that the UK will have to pay its outstanding share of the EU budget even if it leaves the EU without a Brexit deal.

In a statement confirming the EU’s Brexit preparedness remains fit for purpose, the Commission said it would not enter talks on the future trading relationship until the UK honours “the financial obligations the UK has made as a member state”.

Summer Economic Statement

Unlike other years, Minister Paschal Donohoe has to consider two budgetary scenarios when drafting this year’s Summer Economic Statement: One, to prepare for the real possibility of a no-deal Brexit, and the other, which plans for an orderly exit after the 31 October Brexit deadline.

Releasing the Summer Economic Statement last month, Minister Donohoe said that the “external environment” is becoming “increasingly challenging” and that a “disorderly Brexit” is now a “real possibility”, which is why the Irish Government needs to plan for such an event.

The Statement confirms to us that under an orderly Brexit scenario, the Government is targeting a surplus of 0.4 per cent of GDP for 2020. This target will accommodate a budgetary package of €2.8 billion, of which €2.1 billion has been pre-committed to expenditure measures leaving €700 million for further allocation in Budget 2020. However, a disorderly Brexit scenario could result in a deficit in the region of 0.5 to 1.5 per cent of GDP for next year. In September, the Government will decide, based on information available at the time, which scenario will form the basis for Budget 2020.

The Summer Economic Statement sets out the key elements of the Government’s budgetary strategy and this year centres on the ongoing uncertainty surrounding Brexit. The Statement sets out that the objective of budgetary policy is the protection of domestic living standards irrespective of what format Brexit takes and aims to firstly avoid overheating the economy and, secondly, to build up appropriate buffers so that budgetary policy can support the economy in the event of a disorderly Brexit.

National Economic Dialogue

Representatives from Chartered Accountants Ireland attended the National Economic Dialogue which took place at end of June. We represented members on Brexit concerns and on items included in our pre Budget 2020 submission. The Dialogue facilitates an open and inclusive exchange on the competing economic and social priorities facing the government.

More details on the programme can be found on the Department of Finance’s website.

The Institute’s opening statement to the National Economic Dialogue is also available.