Eurogroup in favor of tax shift

1 Sep 2014

The Eurogroup (the finance ministers of countries whose currency is the euro) has issued a statement that includes support for Ex'tax. The Eurogroup is committed to reduce the so-called 'labour tax wedge', which is the difference between labour costs to the employer and the corresponding net take-home pay of the employee. The tax burden on labour in the euro area Member States is among the highest in the world. 

"A high tax burden on labour is an impediment to the objective of supporting economic activity and increasing employment." 

Within the euro area, 11 Member States in particular are facing challenges with regard to the high tax burden on labour, in particular on low-wage earners: Austria, Belgium, Estonia, France, Germany, Italy, Latvia, Luxembourg, the Netherlands, Portugal and Spain.

The group concludes that taxes should shift from labour to consumption/environmental taxes: 

"tax wedge reductions need to be compensated (...) through revenue-neutral tax shifts, away from labour to revenue sources that are less detrimental to growth such as consumption taxes, recurrent property taxes and/or environmental taxes."

 

From: Eurogroup (July 8, 2014) Structural reform agenda - thematic discussions on growth and jobs - Reduction of the tax wedge.