Client: Foresight Centre

Period: 2021

The study has been completed as part of the Foresight Centre’s research into the future-proof tax structure. The aim of the research is to first show what happens to the state’s revenues and expenditures if we do not change anything ourselves, but the world around us changes. It is then planned to find possible solutions in a changing world and to propose options for changing the tax system for the next 15 years.

This paper provides a brief overview of the developments in the tax structure in recent years in European countries. We look at labour taxes (including the personal income tax and social security contributions), corporate income tax, consumption taxes, and property taxes. For each of the main types of tax, the following are listed: current trends in tax revenues based on recent data, significant reforms in recent years, and key future developments affecting the outlook for tax revenues.

Looking at the so-called big picture of the structure of tax revenue – the one from which the tax is collected – it can be seen that it has remained very stable in the European Union over the last twenty years, despite significant technological, economic, institutional and demographic changes. It is difficult to extrapolate from past data a clear trend from labor taxation to consumption, property or business income taxation. The share of national tax revenues in GDP has also been stable in the past. Thus, it appears that tax systems can survive quite significant changes in society and the economy with moderate adjustments, without always requiring radical redesign. At the same time, looking to the future, there are significant changes on the agenda for different types of taxes, and the world of taxes cannot be considered static.

The study was commissioned by the Foresight Centre, made at the Estonian Center for Applied Research Centar and is part of the Foresight Centre’s future-proof tax structure monitoring work.