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Slovakia had largest tax drop in EU

SLOVAKIA had the largest decrease in its tax burden, 10.2 percentage points of its GDP, compared to all other European Union members over the period of 1995 to 2005, the EU's statistical service, Eurostat, revealed on March 23.

There was a drop of 0.5 percentage points in 2005, bringing the overall tax-to-GDP ratio to just under the 30-percent mark at 29.5 percent of the GDP.

According to comments from the Finance Ministry's Financial Policy Institute (IFP), this places Slovakia with Romania and Lithuania as the three countries with the lowest tax burden in the European Union.

Meanwhile, the tax burden in 2005 for the European Union as a whole rose for the first time since 2001, from 40.5 percent to 40.9 percent. Scandinavia and Denmark are reported to have had the highest tax burden in 2005 with over 50 percent of GDP.

"One of the main year-on-year drops (0.5 points) in the tax burden was the transfer of social contributions to the second capitalization pillar of pension reform totalling 0.6 percent of GDP - which are now (non-taxable) private savings rather than public administration funds," said the IFP, which expects the downward trend in tax burden to continue.

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