Discover how taxes fund essential public services and why your contribution matters.

Everybody pays taxes. For instance, when you buy something in a shop, when you earn a salary in your job, or when you own a house, you will pay tax. Taxes are not a new idea. Taxes have been paid throughout history, some of which we still pay today. For example, in the Ancient Roman Empire, people paid Property Tax, Customs Duties, General Tax on Sales of Goods and Inheritance Tax. Variations of these taxes are still paid in countries throughout the EU today. So, what are taxes and why do we pay them?

What are taxes?

Taxes are a mandatory, common contribution. They are charged by public authorities to pay for public services. People of all ages benefit from the public services that are funded by taxes, such as hospitals, schools, public roads, police and public parks. Can you identify other public services in your local area that are funded by taxes?

We often take for granted the availability of public services. However, if people did not pay their taxes, these public services would suffer.  In cases of insufficient or a complete lack of funding, some services would cease to exist, while others would be so expensive that people would not be able to afford them. Therefore, it is important that everyone pays their taxes so that these services are available to everyone.

Who controls the money raised from taxes?

The money collected from taxes is paid into either national or local budgets. In some countries the national budget funds the local budgets. In other countries, taxes on houses and cars go the local budget.

Elected officials are responsible for deciding where the local and national budgets are spent. These officials may be elected to:

• Local councils – where towns and cities have local councils deciding how the local budget is utilised. The council makes decisions that will benefit their local communities.
• Parliaments – where national parliaments decide how the money in the national budget is spent. Members of Parliament make decisions for the benefit of the entire country.

The EU does not have a direct role in tax collection, setting tax rates, or deciding how the local or national budgets of its Member States are spent. However, the EU does oversee national tax rules in some areas. This is to ensure that businesses are not given unfair advantages over business in another country, and that consumers, workers and businesses are not discriminated against by the taxes of another EU country. The EU also works to protect the single market. The single market allows goods and services to be traded freely across borders within the EU.

Eurostat, the statistical office of the European Union, offers information on its website about government expenditure for EU Member States, allowing you to view a breakdown of spending by country and category. Some countries also have their own websites dedicated to display their expenditure information.

Ireland:  https://www.whereyourmoneygoes.gov.ie/en/

Slovenia:  https://proracun.gov.si/

Spain: https://transparencia.gob.es/transparencia/transparencia_Home/index/PublicidadActiva/Presupuestaria/Ejecucion-presupuestaria.html

In Italy the Italian Revenue Agency provides taxpayers with a report and a summary explaining how their taxes were utilised in the previous year.

This information promotes transparency, allowing the public to see how much and to what areas  their governments are allocating spending.  

Where can I learn more?

To find out more about taxation in the EU, explore the range of educational materials available across the TAXEDU website.