Changes in tax systems

This chapter is devoted to the changes in tax systems across the world. Its aim is to outline the most important developments over the past decades and to identify the driving forces of these developments. The chapter is focused mainly on advanced economies, but some features of emerging and developing economies are also taken in consideration. Modern tax systems are increasingly complex as a result of the compromises between the conflicting objectives of social equity, market efficiency and fiscal consolidation. Therefore, the reforms in recent years have been based on a combination of consumption tax increases and reduction of the tax burden on low-income labour and capital. It is argued in the chapter that the main driving forces of the changes in tax systems have been the necessity to boost economic growth, globalisation, the digital economy, population ageing and euro area membership. The chapter is structured as follows: the first part presents the theoretical background of taxation with a focus on equality as opposed to efficiency; the second part briefly outlines the main trends in tax policy in the second half of the 20th century; the third part analyses the developments in tax systems after the beginning of the global crisis of 2008; and the fourth part dwells on the main determinants of tax reforms.