THE past five years have been a bad time to be a taxpayer in Europe. Across the continent, governments have relied heavily on tax rises to cut budget deficits, increasing the total burden by almost 5% of GDP in France and Greece (see chart). But rather than raise taxes any further, many countries are starting to cut them. The European Commission reckons that the euro zone’s tax-to-GDP ratio stabilised in 2013 and is now falling.In January France announced plans to cut payroll taxes by €30 billion ($ 42 billion). This month Italy unveiled income-tax cuts worth €10 billion for those earning less than €25,000 a year. This week Britain proposed tax cuts for most people on low or medium incomes. Ireland and Spain are also planning tax cuts later this year.Lower taxes may be popular, but how are such giveaways being financed? Few countries have the scope to borrow much more. The commission has criticised France and Spain for repeatedly missing their deficit-reduction targets, though it is not taking action against them. Italy’s high level of public debt, which hit 133% of GDP in 2013, has also landed it on the commission’s fiscal “watch list”.Instead,…
The Economist: Europe