The Impact of Value Added Taxe Rates on the Economy of the European Union Countries using Data Mining Approach
The Impact of Value Added Taxe Rates on the Economy of the European Union Countries using Data Mining Approach

Summary/Abstract: A value- added tax (VAT) is currently a key element of tax system and an important source of revenue of EU Member States’ budgets. VAT revenues in 2014 represented 7.75% of GDP and 21% of total tax revenues. The highest proportion was in Croatia, 34.1%, and the lowest in Italy, 13.8%. The present contribution deals with the problem of impact of changes in the VAT rate on the economy of the EU countries. Methodology Knowledge Discovery in Databases and within it the technology of decision trees and webs graph let us handle analysis of the relationship between the change in the VAT rates and selected macroeconomic indicators, namely: gross domestic product (GDP), household consumption expenditures, exports of goods and services and unemployment rate. The subjects of review were the EU countries in the period 2004 - 2015. Modelling results indicated, what applies in general, that the reduction in GDP will change the value- added tax thereby it confirmed the validity of the relationship between the changed rate and economic growth.

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