Report shows that income inequality in the EU increased during the crisis


In October 2014 DG ECFIN and DG TAXUD published the annual report on Tax Reforms in Member States which evaluates key tax reforms implemented in member states, and identifies the present taxation policy challenges. Overall, the report shows that member states have increased the tax burden in the past years as a part of fiscal consolidation policies, but it is anticipated that the tax burden will stabilize in 2014. In the first part of 2014 most member states decreased the tax burden on labour, especially for low income workers, but increased consumption taxes such as the VAT. In general, environmental and property taxes only saw a minor increase. The majority of member states have taken steps to combat tax fraud and evasion.

Furthermore, member states have increasingly used tax measures to support incentives for business investments and innovation. Finally, the report shows that even though income inequality before taxes increased dramatically during 2008-2012, tax and benefit systems ensured that the rise of income inequality was much smaller after taxes. However, in some member states the situation of many low-income households has disproportionately deteriorated.