The report provides an overview of tax reforms implemented in member states over the last year, examines the role that taxation can play in addressing consolidation needs and explores ways to make tax structures more growth-friendly. It found that many member states have reduced the tax burden on labour and expects the tax burden to stabilise in 2014.

It also looks at the size of tax bases, in particular it examines the efficiency of housing taxation, debt bias in corporate taxation, commonly used tax expenditures in direct taxation and the VAT base.

The general trend in corporate income taxation was towards a narrowing of the tax base. Only a small number of member states broadened the base for corporate tax, mainly by restricting loss reliefs and interest deductibility; and reduced their headline corporate tax rates.

In practice, EU member states collect VAT revenue far below the level that would be reached were there no exemptions or reduced rates, and suggests that member states could narrow this gap by limiting the use of reduced rates and non-compulsory exemptions.

Finally, the report presents an in-depth assessment of environmental taxes, tax compliance and governance, and the link between the tax system and income equality.

It found that a significant number of member states increased environmental taxes and suggests that member states could also restructure vehicle taxation and/or phase out environmentally harmful subsidies such as reduced VAT rates on energy products.

The report also found that all member states have introduced measures to fight tax fraud and tax evasion, and to improve tax compliance.

The report is is available at http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_papers/taxation_paper_48.pdf