The Tax Burden of Typical Workers in the EU27

At what point in the year does a typical taxpayer keep his earnings and stop paying the state – his “tax liberation day”? The only EU-wide study using consistent methodology calculates how long people have to work in 27 EU member countries in 2013 before they can keep their earnings and stop paying the state.

Cypriot workers had the lightest burden, working until 14 March to finance their government. Belgians, who worked until 8 August, maintain their position as the worst afflicted.

For the fourth consecutive year the study was published by New Direction and Institut économique Molinari (IEM) with data provided by accountants Ernst & Young. Using one consistent methodology across all EU member countries, with data reflecting the tax reality experienced by real, working people, the study calculated the tax liberation days for 2013.

Key findings of the study include:            

- Typical workers across the European Union saw their average “real tax rate” rise again this year, from 44.11% in 2012 to 45.06% in 2013. The rise of 1.05% since 2010 is largely a consequence of VAT increases in 16 EU member states since 2009.
- Belgium retains its ranking as the country that taxes labour at the highest rate in the European Union; an employer in Brussels spends 2.52€ to put 1€ into a typical worker’s pocket – and that worker’s tax liberation day is August 8. Belgium has held its position since 2011 when Hungary, previously the most severe tax collector, implemented a flat tax scheme.
- 43.4% of all payroll taxes collected in the EU countries – employer contributions to social security paid on top of gross salaries – are largely invisible to employees.
- Retired, disabled, disenfranchised or simply too young, more than half (54.5%) of citizens are not in the labour force. Tax-wise, working people carry most of the weight, which grows heavier as populations grow even older. Since 2010, the proportion of Europeans outside the labour force has grown by 0.2%.
- Flat tax policies have offered considerable tax relief to workers – notably in Hungary, where a new 16% rate has pushed that country’s tax liberation day forward by 22 days in just two years. However, total taxes remain higher in "flat tax" countries (46.8%) than in "progressive" systems (44.6%) – a gap that has widened since 2010.


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