Sub-national governments' tax structure in the European Union countries

The paper analyses the European Union sub-national governments' tax revenue structures and their dynamic during the last decades. Tax composition obtained a considerable interest during the recent years, particularly after the recent global financial and economic crisis. In many European Union countries, the economic crisis and a disastrous public debt has forced societies to rethink their public finance and taxation system qualities. One of the main reform issues is related with the potential of "more growth-friendly tax structure" which means shifting tax burden away from labor (income and social security taxes) to consumption taxation or property. In the paper will be analyzed tax structure changes in the EU member countries on sub-national governments' level. There are two aspects related with fiscal relations between central and sub-national governments. One aspect is related with distributions of fiscal responsibilities among various levels of governments. That issue will lead us to theoretical, empirical and practical analysis of fiscal and tax autonomy issues. Another aspect is associated with issues of tax structure or tax mix. Beside characteristics of individual taxes, also distribution of tax burden among different tax bases is important aspect of efficient tax system in sub-national level. Taxes should generate proper amount of revenue, easy collectable, be fair and support economic stability. Various taxes carry into effect different goals and cannot be replaced by one single type of taxes only. In the first part of the paper theoretical overview of tax structure optimality will be discussed. Particular interest here is taxation structure on the sub-national administrative units? context. On the second part will be empirically analyzed EU countries local level governments? tax structures changes. Main focus here is to demonstrate tax structure changes by tax types (e.g. direct and indirect taxes) and by their economic function (e.g. labor and consumption taxes). Particular interest here is related with changes in the tax structures during the distinct phases of business cycle during the last decade. Empirically will be studied relations among tax structure changes and local governments' economic size; growth of revenues and budget stability. There will be used quantitative research methods (correlation and econometrical analysis, other) to generalize the tax structure changes across the EU member states. The third part concludes the study and provides some forecasts for future periods.