WRITTEN QUESTION E-2240/99 by Christopher Huhne (ELDR) to the Commission. Tax wedge in each Member State.
Date: 1999-12-01
Institutions: European Parliament, Provisional data
Subjects: tax on employment income

24.10.2000

EN

Official Journal of the European Communities

C 303 E/35

indirectly benefits European businesses, which can apply for access to its electronic services and take
advantage of the detailed information collected by TIPS on Latin American SMEs interested in international
partnerships (10 000 are registered). The Latin American Parliament confirmed to the Commission, in a
letter from its President, Mr Juan Adolfo Singer, dated 13 April 1999, that it attached great importance to
TIPS.

(2000/C 303 E/032)

WRITTEN QUESTION E-2240/99

by Christopher Huhne (ELDR) to the Commission

(1 December 1999)

Subject: Tax wedge in each Member State

Please indicate the tax wedge at 25 per cent, 50 per cent, 75 per cent, 125 per cent, 150 per cent, 200 per
cent, 250 per cent, 300 per cent, 350 per cent, 400 per cent and 500 per cent of median employees(cid:146)
earnings in each Member State, state the level of median employees(cid:146) earnings and specify the components
of the tax wedge in each case between the cost to the employer and the net amount received by the
employee.

Answer given by Mr Bolkestein on behalf of the Commission

(20 January 2000)

The Commission neither computes nor possesses data concerning tax wedges in each Member State in the
detailed form requested.

However, the Commission has calculated ex ante tax wedges and their detailed breakdown for some ad
hoc representative case studies of employees. A first approximation to the concept and calculations of the
tax wedge can be found in part III, Section 1, of the 1995 (cid:145)Employment in Europe(cid:146) report (1), with a
calculation of average and marginal tax rates, and in the annual publication (cid:145)Net earnings of employees in
manufacturing industry in the EU(cid:146) (2). More recently, further analysis of the tax wedge on labour and its
components is presented in Study No 2, Section 2 of (cid:145)The EU Economy Review 1999(cid:146) (3).

In addition, in order to provide a unified framework to compare the heterogeneous taxation systems of
different Member States and to measure the taxation of labour, the Commission calculates implicit tax
rates. These rates are calculated by dividing the taxes on a specific activity or good by an appropriate
corresponding tax base, from a macroeconomic point of view.

The implicit tax rates are computed for consumption, labour and (cid:145)other factors of production(cid:146). The implicit
tax rate on labour is defined as the total amount of taxes on employed labour divided by the compensation
of employees. The denominator (cid:145)compensation of employees(cid:146) consists of gross wages and thus also the
amounts paid as social insurance contributions and as wage taxes.

A table illustrating the implicit tax rates on labour for the Member States from 1980 to 1997 is sent direct
to the Honourable Member and to Parliament(cid:146)s Secretariat.

The Commission regularly produces the publication (cid:145)Structures of the taxation systems in the European
Union(cid:146) (4). This is a collection of annotated data on the evolution of the structure of the taxation system in
the Community.

(1) COM(95) 396 final.
(2) http://www.cc.cec/eurostat/eudor-stat/mst3/en/11225/00000001.htm.
(3) European Economy series No 69.
(4) http://www.cc.cec/eurostat/eudor-stat/mst2/en/24248/00000001.htm.