Process-based analysis of European fiscal pressure and its impact on investment during the recession period

This paper investigates the impact of fiscal pressure on gross fixed capital formation (GFK) within the European Union (EU) by proposing a novel three-dimensional model that integrates the cumulative and interactive effects of different tax structures. The study focuses on how fiscal processes influence investment flows and how fiscal process optimization can contribute to sustainable economic development. The research applies a fixed-effects regression model to a panel dataset of 28 decision-making units, covering EU Member States and the EU-27 aggregate for the period 2010–2023. The methodology incorporates rigorous statistical validation, including the Hausman test, the Breusch-Pagan LM test, and the Kruskal-Wallis test to assess model robustness and process disparities across countries. The study also analyzes fiscal process disparities and proposes process improvements to enhance fiscal management efficiency. The results reveal that consumption and labor taxes positively influence gross fixed capital formation when efficiently integrated into fiscal management processes. In contrast, taxes on corporate and self-employment income, as well as energy taxes, have significant negative impacts on fixed capital investment. The analysis demonstrates that these adverse effects can be mitigated through optimized fiscal processes, particularly by reinvesting revenues from transportation and consumption taxes into infrastructure projects. The research also identifies substantial fiscal disparities across Member States, emphasizing the need for process harmonization and fiscal flexibility at the European level. The study provides actionable process management insights for fiscal authorities, businesses, and European policymakers. It highlights the importance of transparent fiscal workflows, digital tax administration, process standardization, and the strategic reallocation of tax revenues to productive investments. The findings support the design of agile fiscal management systems capable of swiftly adapting to economic and structural changes. This paper offers an innovative process-based approach to national tax structures analysis by integrating fiscal structure dynamics with investment process outcomes. It bridges the gap between fiscal policy design and process management, contributing to the improvement of tax collection, fiscal allocation, and investment stimulation within the EU.