It is claimed that tax policy is neither time- nor space-independent due to cross-border tax base mobility that induces spillovers. In other words, fiscal shocks in one country are supposed to have impact on fiscal policies in other countries. This paper verifies this question in two ways. Firstly, a theoretical model is introduced to analyze effects of tax rates adjustment on government debt. Secondly, an empirical spatial econometric study is performed to evaluate impact of capital, labour and consumption taxes on public debt in 34 European countries in 2002-2011. We found strong spatial spillovers. Our results show the consumption tax rate and, to a lesser degree, the capital tax rate significantly affect the sovereign debt, and that the global relations play a leading role (i.e. dominate the local ones) in shaping fiscal policy.