Is there a relationship between excise tax policy and state budget revenues in the European Union?

Taxes in the European Union (EU) countries are an important item in government budgets. The active anti-cyclical policy caused a rapid increase in public expenditures. At the same time budget revenues were falling which resulted in increased budget deficits and public debt.

The tax system of the European Union is not coherent, since it consists of national tax systems of the individual member states.

Excise taxes are specific consumption dues which were introduced long before general consumption taxes. Apart from their role as a source of tax revenue, excise taxes also fulfill other functions (social and environmental roles). In the EU, excise taxes refer mainly to motor fuel, heating oil and gas, alcohol and tobacco products. Production and trading taxes in these groups of products are harmonized by the EU regulations. However, there are also products that are not harmonized, i.e. excise-duty goods.

The aim of this paper is an analysis of changes in excise tax rates in relation to changes in revenues coming from  taxes in chosen European countries.  In recent years countries such as Spain, Greece, Denmark, Ireland, Finland, Netherlands, Belgium, Poland and United Kingdom were characterized by  increasing public debt. On the basis of EUROSTAT and OECD statistics one explanation of the specificity of the fiscal and tax policies in chosen EU countries will be provided with special attention to excise taxes in the years 2007-2013. Using the r-Pearson coefficient we try to prove that there is no correlation between the share of tax revenues in GDP and excise tax rates for three groups of products: alcoholic beverages, manufactured tobacco, and energy products and electricity.