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EUROPEAN UNION

Swedes pay less tax than the Danes

Danes pay the highest level of tax in the EU, measured as a tax-to-GDP ratio of 48.2 percent, pushing Sweden into second place with an overall tax take of 47.1 percent, new figures from Eurostat show.

“In comparison with the rest of the world, the EU27 tax ratio remains generally high and more than one third above the levels recorded in the USA and Japan. However, the tax burden varies significantly between Member States,” Eurostat said in a statement on Monday.

The overall tax-to-GDP ratio in the EU27 was 39.3 percent in 2008 and so both the Swedes and the Danes pay significantly more in tax than the EU average.

The overall tax take has increased somewhat since the financial crisis, from 39.7 percent in 2007, but still down on 40.6 percent in 2000.

Romania has the distinction of paying the least tax in the EU with a take of 28 percent, followed by Latvia on 28.9 percent, Slovakia on 29.1 percent and Ireland on 29.3 percent.

Swedes, who long occupied top spot in the rankings, have seen their tax burden declined steadily from a 2000 high of 51.8 percent. Neighbouring Finland has also cut its levies from 47.2 percent in 2000 to 43.1 percent in 2008.

Cyprus and Malta have meanwhile experienced the highest increases over the period, from 30 percent to 39.2 percent, and 28.2 percent to 34.5 percent respectively.

Among euro area countries the overall tax ratio fell to 39.7 percent in 2008, from 40.4 percent in 2007 with taxes following a similar trend to the EU27, just at a slightly higher level.

The largest source of tax revenue in the EU27 is labour taxes, representing over 40 percent of total tax receipts, followed by consumption taxes at roughly one quarter and taxes on capital at just over one fifth.

In Sweden “implicit tax rate” on labour has declined from 46 percent in 2000 to 42.1 in 2008, and on capital, from 43.2 percent to 27.9 percent over the period. Taxes have meanwhile increased on consumption, from 26.3 percent in 2000 to 28.4 percent in 2008.

Sweden still has the highest top tax rate on personal income in the EU27 with 56.4 percent in 2010, followed by Belgium on 53.7 percent and the Netherlands on 52 percent. The lowest top rate income taxes can be found in Bulgaria with 10 percent, and the Czech Republic and Lithuania on 15 percent.

This information comes from the 2010 edition of the publication Taxation trends in the European Union issued by Eurostat, which is the statistical office of the European Union and the Commission’s Directorate-General for Taxation and Customs Union.

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EUROPEAN UNION

The Euro celebrates its 20th anniversary

The euro on Saturday marked 20 years since people began to use the single European currency, overcoming initial doubts, price concerns and a debt crisis to spread across the region.

The Euro celebrates its 20th anniversary
The Euro is projected onto the walls of the European Central Bank in Brussels. Photo: Daniel Rolund/AFP

European Commission chief Ursula von der Leyen called the euro “a true symbol for the strength of Europe” while European Central Bank President Christine Lagarde described it as “a beacon of stability and solidity around the world”.

Euro banknotes and coins came into circulation in 12 countries on January 1, 2002, greeted by a mix of enthusiasm and scepticism from citizens who had to trade in their Deutsche marks, French francs, pesetas and liras.

The euro is now used by 340 million people in 19 nations, from Ireland to Germany to Slovakia. Bulgaria, Croatia and Romania are next in line to join the eurozone — though people are divided over the benefits of abandoning their national currencies.

European Council President Charles Michel argued it was necessary to leverage the euro to back up the EU’s goals of fighting climate change and leading on digital innovation. He added that it was “vital” work on a banking union and a capital markets
union be completed.

The idea of creating the euro first emerged in the 1970s as a way to deepen European integration, make trade simpler between member nations and give the continent a currency to compete with the mighty US dollar.

Officials credit the euro with helping Europe avoid economic catastrophe during the coronavirus pandemic.

“Clearly, Europe and the euro have become inseparable,” Lagarde wrote in a blog post. “For young Europeans… it must be almost impossible to imagine Europe without it.”

In the euro’s initial days, consumers were concerned it caused prices to rise as countries converted to the new currency. Though some products — such as coffee at cafes — slightly increased as businesses rounded up their conversions, official statistics have shown that the euro has brought more stable inflation.

Dearer goods have not increased in price, and even dropped in some cases. Nevertheless, the belief that the euro has made everything more expensive persists.

New look

The red, blue and orange banknotes were designed to look the same everywhere, with illustrations of generic Gothic, Romanesque and Renaissance architecture to ensure no country was represented over the others.

In December, the ECB said the bills were ready for a makeover, announcing a design and consultation process with help from the public. A decision is expected in 2024.

“After 20 years, it’s time to review the look of our banknotes to make them more relatable to Europeans of all ages and backgrounds,” Lagarde said.

Euro banknotes are “here to stay”, she said, although the ECB is also considering creating a digital euro in step with other central banks around the globe.

While the dollar still reigns supreme across the globe, the euro is now the world’s second most-used currency, accounting for 20 percent of global foreign exchange reserves compared to 60 percent for the US greenback.

Von der Leyen, in a video statement, said: “We are the biggest player in the world trade and nearly half of this trade takes place in euros.”

‘Valuable lessons’

The eurozone faced an existential threat a decade ago when it was rocked by a debt crisis that began in Greece and spread to other countries. Greece, Ireland, Portugal, Spain and Cyprus were saved through bailouts in return for austerity measures, and the euro stepped back from the brink.

Members of the Eurogroup of finance ministers said in a joint article they learned “valuable lessons” from that experience that enabled their euro-using nations to swiftly respond to fall-out from the coronavirus pandemic.

As the Covid crisis savaged economies, EU countries rolled out huge stimulus programmes while the ECB deployed a huge bond-buying scheme to keep borrowing costs low.

Yanis Varoufakis, now leader of the DiEM 25 party who resigned as Greek finance minister during the debt crisis, remains a sharp critic of the euro. Varoufakis told the Democracy in Europe Movement 25 website that the euro may seem to make sense in calm periods because borrowing costs are lower and there are no exchange rates.

But retaining a nation’s currency is like “automobile assurance,” he said, as people do not know its value until there is a road accident. In fact, he charged, the euro increases the risk of having an accident.

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