Romania has one of the lowest taxation rates in the EU and lowest taxes on income and wealth (4.9%)

By R. Constantin
Today, Eurostat released a report on Taxation in 2018. Eurostat shows that at the EU level, the taxation increased slightly from 40.2% / GDP to 40.3%.
According to the statistical data, the lowest EU tax rates are registered in Ireland (23%), followed by Romania (27.5%).
The overall tax-to-GDP ratio, meaning the sum of taxes and net social contributions as a percentage of Gross Domestic Product, stood at 40.3% in the European Union (EU) in 2018, a slight increase compared with 2017 (40.2%). In the euro area, tax revenue accounted for 41.7% of GDP in 2018, up from 41.5% in 2017.
The tax-to-GDP ratio varies significantly between Member States, with the highest share of taxes and social contributions in percentage of GDP in 2018 being recorded in France (48.4%), Belgium (47.2%) and Denmark (45.9%), followed by Sweden (44.4%), Austria (42.8%), Finland (42.4%) and Italy (42.0%).
At the opposite end of the scale, Ireland (23.0%) and Romania (27.1%), ahead of Bulgaria (29.9%), Lithuania (30.5%) and Latvia (31.4%) registered the lowest ratios.
Eurostat shows that compared to 2017, in most Member States the level of taxes and duties has increased as a share of GDP.
However, the discrepancies are very large. In Romania, for example, the tax-to-GDP ratio rose from almost 26% to 27%. This situation is not comparable, but in Denmark, Belgium and France, where the mentioned ratio was in 2018 over 45%.
And yet, the National Press Agency of Romania (Agerpres) states in the article or exactly this aspect: the fact that the taxation rate has increased. Agerpres can induce, by the title of its text, the idea that in Romania there is a high tax rate, compared to the rest of the EU member states. Which is, as I said, exactly the opposite.
Compared with 2017, the tax-to-GDP ratio increased in sixteen Member States in 2018, with the largest rise being observed in Luxembourg (from 39.1% in 2017 to 40.7% in 2018), ahead of Romania (from 25.8% to 27.1%) and Poland (from 35.0% to 36.1%).
In contrast, decreases were recorded in seven Member States, notably in Denmark (from 46.8% in 2017 to 45.9% in 2018), Hungary (from 38.4% to 37.6%) and Finland (from 43.1% to 42.4%).
In 2018, taxes on production and imports made up the largest part of tax revenue in the EU (accounting for 13.6% of GDP), closely followed by net social contributions (13.3%) and taxes on income and wealth (13.2%). The ordering of tax categories was slightly different in the euro area. The largest part of tax revenue came from net social contributions (15.2%), ahead of taxes on production and imports (13.3%) and taxes on income and wealth (13.0%).
Looking at the main tax categories, a clear diversity prevails across the EU Member States. In 2018, the share of taxes on production and imports was highest in Sweden (where they accounted for 22.4% of GDP), Croatia (20.1%) and Hungary (18.6%), while they were lowest in Ireland (8.0%), Romania (10.7%) and Germany (10.8%).
For taxes related to income and wealth, the highest share by far was registered in Denmark (28.9% of GDP), ahead of Sweden (18.6%), Belgium (16.8%) and Luxembourg (16.4%). In contrast, Romania (4.9%), Lithuania (5.7%) and Bulgaria (5.8%) recorded the lowest taxes on income and wealth as a percentage of GDP.
Net social contributions accounted for a large proportion of GDP in France (18.0%) and Germany (17.1%), while the lowest shares were observed in Denmark (0.9% of GDP), Sweden (3.4%) and Ireland (4.2%). (Source: Eurostat/October 30, 2019).