Fiscal policy in the EU countries the most affected by the crisis and in Poland

The effects of the current financial crisis have been felt most severely by the four European Union countries: Greece, Spain, Portugal, and Ireland. This paper makes an assessment of fiscal policies pursued in these countries compared with other countries in the EU and Poland. Fiscal policy is considered in two aspects: from the level and structure of public expenditure and from the level and structure of budget revenues in the EU-27, the leading Euro-zone countries, the four countries most affected by the crisis, and in Poland.

The paper consists of four parts. The first part presents information on the economic situation of the countries under study such as GDP growth rate, deficit and debt, the share of revenues and expenditure in relation to GDP. Then, the anti-crisis measures implemented in these countries will be examined, as well as their impact on the level and structure of public expenditure, this will be followed by the assessment of the implemented programs of fiscal consolidation.

Two further parts of the paper are devoted to taxes. The response of tax systems in the EU countries to the crisis will be presented - what changes in the tax policy were introduced in Greece, Spain, Portugal, Ireland, and Poland, and also which countries have managed the crisis best (e.g., Germany, France, Sweden).

Then, based on Eurostat data and “Taxation trends in the European Union” published by the European Commission, a detailed analysis will cover changes in tax burden on consumption, labour, and capital. The tax burden will be analyzed in two cross sections: 1) changes in the share of taxes on consumption, labour, and capital in the budget revenues of countries under study, 2) changes in the implicit tax rate on consumption, labour, and capital. The observed trend of increasing tax burden on consumption and labour and reducing the tax burden on capital leads to a negative consequences; economic (decrease in consumer demand) and social (increased social inequality). It appears, moreover, that such a fiscal policy will not help end the crisis of public finances in the future.

Key word: fiscal policy, taxation, tax burden