An empirical evidence for the impact of taxation on economy growth in the European Union

The paper is intended to study the basic trends in the distribution of the total tax burden in the EU (27) member states during the period 1995-2010. The comparative analysis is focused on the cross-country differences in terms of total tax burden, measured by the tax-to-GDP ratio and design of tax structure, presented by the breakdown of the total tax revenues into standard components such as direct taxes, indirect taxes and social contributions. Special emphasis is placed upon the impact of taxation on the economic growth. The relationship is investigated by the means of the regression analysis. The conclusion is that tax structure based on direct taxes is more efficient in terms of supporting the economic growth in the EU countries.