Approximately half of all tax revenues were generated by taxes on labor in the European Union in 2021, with an additional 27.5 percent coming from consumption taxes, and around a fifth coming from taxes on capital. Sweden, Germany, and Austria were the European countries which generated the greatest revenue from labor taxes, with these countries being prime exemplars of traditional European welfare states which apply highly progressive taxes - i.e. the more income a person earns, the higher the tax bracket they are in - to labor income in order to be able to fund transfers and social services.
At the other end of the scale are countries such as Croatia and Bulgaria, which generate the most of their revenues from consumption taxes. These countries tend to have lower rates of income taxation on their citizens and less robust systems of social welfare, therefore, the government funds its activities more from taxes on the consumption of goods and services.
Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country
*Norway is not a member of the European Union, however, as a part of the European Economic Area - a partnership between the EU and other non-EU European countries - the EU's statistical agencies also collect data for Norway.
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European Commission. (July 27, 2023). Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country [Graph]. In Statista. Retrieved November 22, 2024, from https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/
European Commission. "Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country." Chart. July 27, 2023. Statista. Accessed November 22, 2024. https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/
European Commission. (2023). Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country. Statista. Statista Inc.. Accessed: November 22, 2024. https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/
European Commission. "Share of Total Tax Revenue Generated by Taxes on Labor, Consumption, and Capital in The European Union in 2021, by Country." Statista, Statista Inc., 27 Jul 2023, https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/
European Commission, Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country Statista, https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/ (last visited November 22, 2024)
Share of total tax revenue generated by taxes on labor, consumption, and capital in the European Union in 2021, by country [Graph], European Commission, July 27, 2023. [Online]. Available: https://www.statista.com/statistics/1456405/share-of-tax-revenue-type-of-tax-eu/