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Non-Tax Revenue in the European Union: A Source of Fiscal Risk?

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  • Gilles Mourre
  • Adriana Reut

Abstract

This paper examines the characteristics of government non-tax revenue in the European Union. Nontax revenue includes a large number of diverse income sources, such as fees charged for the provision of public services, income from financial assets and government property, and EU funds. Receipts from sources other than taxes account for slightly more than one-tenth of total revenue, but the fiscal risk stemming from the volatility of non-tax revenue is three times higher than that from the volatility of tax revenue. We present measurements of volatility in non-tax receipts in the Member States that can help identify the uncertainty around annual projections of revenue. Panel data analysis is used to examine whether macroeconomic and fiscal variables can explain the differences in non-tax revenue among Members States. Government spending, tax receipts and the size of financial assets held by government are found to explain close to a third of the cross-sectional variation in non-tax revenue. Granger causality tests are used to examine the direction of causality across Member States between non-tax revenue, tax receipts, and government spending.

Suggested Citation

  • Gilles Mourre & Adriana Reut, 2017. "Non-Tax Revenue in the European Union: A Source of Fiscal Risk?," European Economy - Discussion Papers 044, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    • Handle: RePEc:euf:dispap:044
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    References listed on IDEAS

    as
    1. Hickey, Rónán & Smyth, Diarmaid, 2015. "The Financial Crisis in Ireland and Government Revenues," Quarterly Bulletin Articles, Central Bank of Ireland, pages 60-71, October.
    2. Gilles Mourre & Caterina Astarita & Anamaria Maftei, 2016. "Measuring the Uncertainty in Predicting Public Revenue," European Economy - Discussion Papers 039, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Hickey, Rónán & Smyth, Diarmaid, 2015. "Government revenues in Ireland since the financial crisis," Economic Letters 07/EL/15, Central Bank of Ireland.
    4. Morrison, Kevin M., 2009. "Oil, Nontax Revenue, and the Redistributional Foundations of Regime Stability," International Organization, Cambridge University Press, vol. 63(1), pages 107-138, January.
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    Cited by:

    1. Lu Wang & Pavel Rousek & Simona Hašková, 2021. "Laffer curve - a comparative study across the V4 (Visegrad) countries," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 9(2), pages 433-445, December.
    2. Zhao, Renjie & Zhang, Jiakai, 2022. "Rent-tax substitution and its impact on firms: Evidence from housing purchase limits policy in China," Regional Science and Urban Economics, Elsevier, vol. 96(C).
    3. Valentin Marian ANTOHI & Monica Laura ZLATI, 2017. "The Impact of the Application of the Fiscal Risk Assessment Procedure in Romania," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 3, pages 78-86.
    4. Volkan Yurdadog & Neslihan Coskun Karadag & Murat Albayrak & Oguzhan Bozatli, 2022. "Analysis of Non-tax Revenue: Evidence from the European Union," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 24(60), pages 485-485, April.
    5. Kateryna Anufriieva & Svitlana Brus & Yevhen Bublyk & Yuliia Shapoval, 2021. "Ukrainian Financial System Development: The Path to EU," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 39-55.

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    More about this item

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H27 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other Sources of Revenue

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