Capital Taxation in European Transition Economies: Comparative Analysis

Abstract

Capital taxes have an important place in the tax policy due to its role on economic growth and other effects. Capital taxes derived from different economic sources or parties such as: income of households, income of corporations, income of self-employed, stock of capital. In EU, related with the goals of the tax policy which can be explained as: equity-efficiency, capital taxation can be varied in different countries. For EU transition economies, economic growth may become preferential goal of the tax policy related with the relatively low level of GDP in contrast with EU15. So, EU transition economies may apply tax policy in favor of capital. In this study, we investigated our assumption: capital can be taxed at a lower level in EU11 economies compared to EU15 countries for encouraging capital”. Tax statistics of Eurostat on capital taxation for several indicators were used for the period of 2008-2018. Our statistical analysis and findings partially show that capital is taxed relatively low in EU transition economies and tax burden on capital has decreased more than EU15 in the period of 2008-2018.