EC calls for taxation shift from labour to environment
“To sustain fiscal consolidation, several Member States are raising taxes. The Commission has called for a shift in taxation away from labour towards environmentally-harmful practices, consumption and real estate, while ensuring that the burden does not fall disproportionately on the poorest sections of society. While a number of Member States have significantly increased consumption taxes and started to reverse the decline in environmental taxation, there is no evidence of an overall reduction in labour taxation.”
Of particular interest is the conclusion that Spain’s “Revenue from environmental taxes was the lowest in the EU in 2010 (as a percentage of GDP)”. To counteract this, the Commission recommends that Spain “Introduce a taxation system consistent with the fiscal consolidation efforts and more supportive to growth, including a shift away from labour towards consumption and environmental taxation. In particular, address the low VAT revenue ratio by broadening the tax base for VAT. Ensure less tax-induced bias towards indebtedness and home-ownership (as opposed to renting).”
Sources: EC-Country specific recommendations, Commission report ACTION FOR STABILITY, GROWTH AND JOBS.