characteristics in terms of level and structure of taxation. One shall be extremely prudent in drawing
conclusions but the following picture appears.
First, it is interesting to notice that the two models doing well in terms of equity have a significantly
higher average total tax-to-GDP than the two models doing less well on this criterion. Correlation does
not mean causation but it would be interesting to investigate whether tax systems in Europe do so poorly
in terms of redistribution as often thought^55. Interestingly as well, both models doing well in terms of
efficiency are also those which rely proportionally less on social security contributions with 25.7% and
29.1% respectively for the Anglo-Saxons and the Nordics, compared to 34.5% and 34.7% for the
Mediterranean countries and the Continentals. In addition, the Nordic countries, faring well on both
accounts, are also those that relies the most on direct taxes with a share of 36.5% (comp. to 33.3%,
31.1%, and 28.1% for the Anglo-Saxons, the Continentals and the Mediterranean countries respectively).
In particular, their share of personal income taxes is higher than for the others (26.9% of the total
compared to 24.2% for the Anglo-Saxons, 21.7% for the Continentals and only 17.3% for the
Mediterranean countries).
Figure 12 - Total taxation in percentage of GDP and social models051015202530354045Nordic Continental Mediterranean Anglo-Saxon% GDPIndirect Direct SSC
Source: European Commission (2006) and own calculations. Averages are arithmetic averages of
the 1995-2004 averages per country.This is also reflected in their mix of taxes on consumption, labour, and capital. Whereas, here again,
correlation is not causation and caution shall be taken as the structure of expenditures is obviously also
one element that affects the performances in terms of redistribution and raising employment, it is
interesting to see that the picture seems to suggest that the models that fare the best in terms of equity are
those relying relatively more on labour income taxes while those that fare the best in terms of efficiency
are those that rely the least on taxes on capital.
Table 5 - Shares of consumption, labour and capital and social models
In % of total Consumption Labour Capital
Nordic 30,7 54,2 15,2
Anglo-Saxon 36,8 46,6 16,7
Continental 28,7 52,1 19,6
Mediterranean 32,4 44,6 23,7
Source: European Commission (2006) and own calculations. Averages are arithmetic averages of the 1995-2004 averages per country.(^55) Sapir (2005) stresses rather the role of human capital and education.