Mihaela Andreea Stroe
LESIJ NO. XVIII, VOL. 1/2011
COMPARATIVE ANALYSIS OF VAT EVOLUTION IN THE EUROPEAN
Mihaela Andreea STROE*
In this paper we study a comparative analysis of VAT in different states of the world. I
made some observation on this theme because I believe that VAT is very important in carrying out
transactions and the increase or decrease of this tax has a major impact upon national economies
and also on the quality of life in developing countries. The papers has to pourpose to make a
comparison between the American and European system of taxation with its advantages and
disadvantages and, in the end to render an economic model and its statistics components. VAT is a
value added tax which appeared about 50 years, initially with two purposes: one to replace
certain indirect taxes, and another to reduce the budget deficit according to the faith of that time.
The first country that has adopted this model was France, calling it today as value-added tax.
Keywords: rate, tax, VAT, budget deficit
One of the important factors th at led to this measure was established to avoid tax
cascading phenomenon, namely the taxation of the same product. Today often easier and more
correct, tax only the value-added product. This is why we consider taxes a necessary phenomenon
. Along parallel between the U.S. and Europe which has been taken as reference models in order to
discuss and debate their favorable and less favorable points, and most of them in my opinion is
representative of the French model, implementation of the tax where it had a beneficial role in the
economy. As an example, we use the European model which is used in the VAT and the American
model. In the first chapter I talked about the effects of introducing VAT in the euro zone and pros
to this measures. On the other hand we will use the U.S. model as an example for countries that
have introduced this tax measure. It will be discussed the pros and cons of implementing these
measures in both Europe and the USA and see why are the reasons for which VAT was
implemented or not. In the next chapter I will analyze some concrete examples of Europe countries
that have value added taxation system and will analyze the benefits that were subsequently
introduced this measure in developing economies.
Today most European Union states have increased the rate of VAT and the effects of this
measure for each economy participant will be a subject of debate. The largest VAT increase since
2010 had 5 percent, the case of Romania will be discussed and also the effects of this increase.
This increase was primarily due to the population, and secondly due to the economy.
However, in addition to countries that have increased the VAT rate to reduce the budget
deficit exists also the countries that have not implemented this measure, like France. Separately
will discuss about tax reform and the reason which have not adopted the VAT increase in 2010
thus making a parallel with the current situation in Romania. I consider necessary the parallel
* Assistant, Faculty of Social and Administrative Sciences, „Nicolae Titulescu” University, Bucharest (e-mail: