Estonia Ranks First in Competitive Tax Systems In Europe
Photo by Scott Graham on Unsplash
Recent research from the Tax Foundation reveals that Estonia holds the title for the most competitive tax code in Europe for the eleventh consecutive year. The report highlights Estonia’s flat 20% rates on both corporate and individual income as key factors contributing to its top position. Furthermore, the country’s property tax structure focuses on land value rather than on investments, enhancing its attractiveness to businesses.
Alongside Estonia, both the UK and Germany are making strides in tax competitiveness. Their systems feature generous corporate investment allowances, encouraging businesses to deploy capital efficiently. The report indicates that these allowances are crucial as they directly impact corporate behavior and investment decisions, promoting sustainable economic growth.
In stark contrast, Italy ranks with one of the least competitive tax systems, trailing just behind France. The report criticizes Italy for its “multiple distortionary property taxes” and a narrow VAT base, which lead to inefficiencies and hinder economic progress. As governments navigate a post-pandemic recovery and energy crisis, the challenge remains to balance the need for revenue with the desire for a non-distortionary tax environment.
