Tax Mix Convergence and Economic Performance in the EU27

Abstract

Tax policy and the structure of taxation represent important components of fiscal policy and may influence economic performance across countries. In the context of the European Union, increasing economic integration raises the question of whether national tax systems are becoming more similar and whether this process is accompanied by convergence in economic performance. Although existing literature extensively examines the relationship between tax structure and economic growth, empirical evidence remains fragmented and the extent of tax structure convergence within the EU remains insufficiently explored. This study analyses the evolution of tax mix structures and economic performance across the 27 current member states of the European Union (EU27) during the period 2000–2024. The analysis uses harmonised data from the Eurostat database and focuses on three main tax revenue categories: taxes on production and imports, current taxes on income and wealth, and net social contributions. Economic performance is measured using GDP per capita expressed in purchasing power standards (PPS). The study applies sigma convergence indicators, specifically the standard deviation and the coefficient of variation, to evaluate whether EU countries are becoming more similar in terms of tax structure and economic performance. The results indicate that the dispersion of tax structures across EU countries has remained relatively stable over time, suggesting limited convergence of national tax systems despite ongoing economic integration. Similarly, persistent differences in GDP per capita indicate that economic convergence within the EU remains incomplete. The paper contributes to the literature by providing a long-term descriptive analysis of tax mix dispersion in the European Union and by linking the evolution of tax structures with differences in economic performance. These findings highlight the continued diversity of national tax systems within the EU and provide new insights into the relationship between fiscal heterogeneity and economic convergence.