Abstract:

In any modern economy the business environment will be affected by taxation. The goal of this study is to look at the impact taxation has on the business environment in the European Union using business confidence as a measure for the expectations entrepreneurs have regarding the future evolution of the four major sectors of the economy: the services sector, the retail sector, the construction sector and the industrial sector. The tax burden will be used to measure the level of taxation and the impact of fiscal policies different EU countries implement. The research was done using quarterly data for the period between 1985Q1 and 2016Q3 collected from all 28 EU Member States. Several regression models were estimated which lead to individual conclusions for each Member State. These conclusions show the various effects that changes in the tax burden can have on the business environment.