Exploring the Nexus Between Tax Revenue Trends and Social Contributions Development in European Union Countries

Abstract

The purpose of the research: to analyze the main tendencies of the tax revenue and social contributions in EU countries, to study the hypothesis concerning convergence of the annual growth rates of the total tax revenue (including social contributions) to the GDP in European Union countries during the last decade and to build the predicted values for the total tax revenue (including social contributions) as GDP percentage in EU countries. The research was conducted based on the time serious analysis) and forecasting method to predict data values of the total revenue to the GDP. The analysis presented in the research has shown that tax revenues in the main tax categories displayed a corresponding pattern, with a differing fiscal lag for direct taxes, indirect taxes and social contributions. Correlation analysis has shown that many countries of EU essentially correlate ratio of the total tax revenues to the GDP. Using the presented models for the time series of the total revenue to the GDP in Eiropenean Union counties, the predicted values were obtained. The research has shown that some countries have common characters of the total revenue, and some gruop of countries has varies. Regardless of the declaration of the common economic policy in EU, as well as levy system in EU, the research has noticed some differences in the total revenues concerning the GDP trends. The impact of possible convergence in tax burden policy in EU countries explains these differences. In order to harmonize tax policy and to increase the fiscal role of taxation in the EU countries, such measures are proposed: application of unified procedures and conditions of administration of taxes and other budget revenues; differentiation of tax rates and establishment of the upper limit of their size; introduction of a unified tax base; differentiation of objects of taxation with the purpose of increase of tax revenues to the budget and avoiding increase of tax burden for population and others.

Scenario approach in forecasting tax revenues of the state budget of Ukraine

“…That is why the implementation of the scenario approach in forecasting tax revenues to the budget is a relevant direction for improving fiscal policy. 2019), who have suggested using the Bayesian vector-based automatic regression method to forecast tax revenue in South Africa [4]; Mauler (2019), who has examined the impact of tax analysts' forecasts on firms' behavior and investment decisions [5]; as well as Ukrainian scientists - Krasnokutska & Fadeyev (2016), who have suggested methodological approach to forecasting revenue from the personal income tax to the local budget on the basis of correlation-regression analysis taking into account the trends of change in the gross regional product [6]; Ivanchenko (2017), who has identified the place of medium-term forecasting in Ukraine on the way to the implementation of medium-term budgetary planning [7], Khomutenko & Bzova (2017), who have implemented forecasting the amount of corporate income tax revenues to the state budget of Ukraine using the method of correlation-regression analysis [8]; Pasichniy (2017), who, using correlation-regression equations, has estimated the influence of the main factors on the dynamics of VAT revenues, income tax, personal income tax and excise tax [9]; Vasilieva (2019), who has summarized scientific ideas on the theoretical aspects of tax forecasting and planning as integral mechanisms of state tax policy [10]; Dubrovina et al (2019), who have examined the main trends of tax revenues and social contributions in EU countries and estimated the share of total tax revenues (including social contributions) in GDP in EU countries [11]; Chugunov & Makohon (2019), who have identified the leading role of fiscal strategy in ensuring macroeconomic stability and accelerating economic growth [12] and others.…”