Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
and economic freedom

Public spending

The Relevance of Regulation for the Greek Debt Crisis

Iref Working Paper

The chances of a successful recovery in Spain

Italy and the need for a new industrial revolution

The Serbian r(EU)volution passes through privatization and political stability

A report on the IREF Workshop in London (6th June 2016)

(Br)Exit Strategy

Latest publications

The Northern Powerhouse

An historic decentralization deal in England
There is historically in England a North/South division. In the South, trade and financial services have made London the target of international investments and the principal source of economic growth in the country. In the North, there is no city (...)

A critical time for the NHS

How is NHS coping with winter?
Winter is historically, and not surprisingly, a very challenging time for the UK National Health System, NHS, due to lower temperatures and the spread of viral infections. Winter 2015/2016 seems to be particularly bad and the system is showing clear signs of a (...)

No Schwexit, at least for now.
New developments in the land of the fiscally federal.

Switzerland may be known for low taxes, but that does not prevent it from redistributing them; richer regions subsidise the poorer ones. Now at least one paying canton is starting to protest against the arrangement. There really is a big difference between how much taxpayers in different (...)

Sugar taxation won’t work and anway, there’s a better way.

The UK government has been watching Jamie Oliver’s TV shows and now wants to implement his plans for a new tax on sugar. The Commons‘ Health Committee has reported its overwhelming support for the idea at the end of November. Other than arguments that such taxes are “good per se“ because they will (...)

Germany: the highest income equality among large rich economies

Germany Income per capita is not only high in Germany, it is also relatively equally distributed in the population. OECD data indicate that only a few small countries have income both higher and more equally distributed than Germany. In other large European countries like France, UK, Italy or (...)

Subsidies: the real reason why foreigners cannot own land

It is good when foreigners buy agricultural land. Johnny Foreigner will have evidentnly paid more than anyone else, and he can bring access to better capital, technology, know-how or marketing channels. That’s what the single market is for.
Yet governments fear him and legalise against him - (...)

The “Other” European Banana Problem

Two decades after the last EU bananagate, it’s going bananas again. EU subsidy programme to bring "fruits, vegetables and bananas" [sic!] to schools is only partly trying to do a "good thing". Partly it’s changing schools into dumpsters for excess output of oversubsidised agriculture. And the EU (...)

EU has too much money: The Proof

How do you know that any institution has too much money? When it does not manage, in spite of best intentions, to spend them all. Then there is room for scaling down the budget. The money will not disappear - it will be spent by the original "donors" instead. We show that the EU is, at least to (...)

It is not Brexit that endangers sovereign debt

There are plenty of reasons to panic about the level of UK government deficits and debt. But Brexit, even if it actually came, is not one of them. We review the relationship between a UK-sans-EU and public finance.

Fiscal health means more than current government debt
Some “fiscally healthy” Eurozone governments are in fact in dire straits

The Greek bankruptcy of 2010 was the latest impetus for reviving the debate on robustness of governments’ budgets in the Eurozone. It became clear that in order to assess the long-term fiscal health, it is not enough to look at the much used public debt-to-GDP ratio. Additional indicators need (...)

Croatian government has just grown bigger. And more sinister.

The poorest poor in Croatia are having their debts wiped out by the government. The motivation may be noble, but the apportioning of the costs is despicable. Once again, government’s power and reach grows, yet it keeps this fact under the carpet. Who’s (...)

New rules encourage EU governments’ profligacy

New rules about deficits run by Member State governments have been announced by the European Commission. They are phrased as “guidance” so no Parliamentary approval is needed. They are said to “encourage structural reforms and investment”, but IREF shows that they discourage structural reforms and (...)

2 Turtle Doves
Twelve Days of Fiscal Christmas

To replace the original sacrifice of two turtle doves, the biggest European authority in the Middle Ages, the Catholic Church, dictated what people should eat. EU governments continue doing the same, by fiscal means. However, this fiscal policy is full of paradoxes. Governments tax consumption (...)

1 Partridge in a Pear Tree
Twelve Days of Fiscal Christmas

A partridge in a pear tree, the famous gift of the first day of Christmas, is at the centre of an EU fiscal paradox: European taxpayers are paying for extensive programmes to protect the habitat of the dwindling species. At the same time, they are fiscally forced to help to destroy partridge’s (...)

ECJ ruling strengthens European Welfare States

New ECJ ruling confirms that member states can currently deprive non-residents of welfare payments. Yet, it has been popularly portrayed as a new tool to protect the spiralling costs of EU welfare states. We show that on the contrary, costs may rise, both in the short and long run, and the (...)

November’14 Assessment of Commision’s Legal Action

Every month, the EU Commision starts dozens of legal actions against Member States for non-compliance with EU law. We evaluate the November crop of fiscally-related cases. While 2 such actions are generally a good idea, 4 are a bad idea, reducing EU citizens’ opportunities for an efficient and (...)

All aboard the fiscal board. Are you bored?
Should fiscal policy be taken away from governments?

When governments are unable to take care of their finances, is it time to appoint them a guardian who will take care of that business and (co-)determine fiscal policy? When is such guardian irreplaceable and how could they help?

EU in bolshevik footsteps: the new GOELRO
A century later....

EU governments are increasingly subsidising electric plug-in cars. Many countries have “five year action plans” to electrify their roads, using tax money. Environmental benefits will actually decrease with e-car proliferation, and the governments are forcing us to pay for something we may soon (...)

For whom the toll bells
So who would build roads without taxes?

A century after privately built and operated roads were either nationalized or closed down, a new private toll road has sprung up in England. It is popular with drivers, if not with the local government. Is it always wrong to charge for use of infrastructure built from tax money? Is it OK that (...)

Governments should not be able to blame courts for their deficits
Portuguese Constitution is too PC

Portugal’s Constitutional court joined the ranks of those European courts that have halted crucial welfare reforms by governments. IREF reviews the evidence and concludes that fiscal policy must, for better or worse, remain the sovereign responsibility of the government held accountable at the (...)

Does turnout affect fiscal policy?

How economics - and the fiscal cycle - affect voter turnout is a richly studied question. But what about the other way? Can turnout - how many or few voters turn up to vote - affect the fiscal situation in the following period? IREF investigates and finds that people simply going and voting can (...)

A New Ocean Discovered! - or just another subsidy?

Cypriot government has unilaterally “redefined” one of the conditions of its 10bn bailout package and lifted a ban on government officials traveling business class. Is this an exercise in customary opulent luxury or is it actually a hidden subsidy? And aren’t all governments (...)

Geographic Distance from Brussels Matters

Voter turnout at the latest European Parliament election is much debated. Many countries saw further drops compared to last EP elections in 2009, fuelling concerns about widening democratic deficit. Beyond the general facade, IREF discovers an interesting geographic pattern in the turnout (...)

Basic income is not so basic after all

Nobody likes poverty. But how do we end it? Suppose we give everyone some money. This will automatically include the poor, we don’t have to identify them, problem solved. Is it doable? Will anyone still work, create new ideas, write poetry, love?
The answer depends largely on how basic the (...)

The Butch Dutch
They want to be taxed.. or so they say.

Government’s mortgage interest subsidy, besides creating a lot of social costs, benefits almost solely the rich, yet it’s precisely the rich who boldly claim to want to scrap the programme. What’s going on?

Obama The Ultimate Survival Guide
A Book By Wayne Allyn Root (Regnery, 2013)

Ultimately, how to resist the Obamamania that is ruining the United States?

Banque de France vs Bundesbank

The staff costs are higher at the Banque de France than in the Bundesbank! This is one of the conclusions of our comparative study “Banque de France vs Bundesbank”. On the one hand, 1.45 billion euros, in the other hand, 700 million euros! Regarding pension costs, the comparison also makes a (...)

The U.S. Economy Is Getting Better Thanks To The Stimulus. Really?

It seems logical: economic growth resumed in the United States, and since the United States used an economic stimulus thanks to budget deficits, it could be believed that public spending lead to recovery. Indeed, but… it is in the sectors that did not benefited from the Federal money that new (...)

28 millions French workers versus 14.5 millions who live off the State!

It is the stunning figure revealed by Jean-Philippe’s Delsol in his book "Why I Am Going To Leave France", an IREF bestseller.
Between the public sector (5.2 millions), the parapublic sector (2 millions), those who are granted the public allowance called "Active Solidarity Revenue" (1.3 (...)

Violence and Absurdity of French Anti-Wealth Ideologists

Attacks against wealthy people are still going on in spite of the fact the Welfare-State is plundering taxpayers. In a recently published book, sociologists – I should say ideologists – Michel and Monique Pionçon-Charlot are criticizing those they call "deliquents". No, wealthy people are not (...)

Positive Opinion of the Administration: France vs Germany
50% against 73% favorable to the administration!

According to a Eurobarometer / TNS Opinion, only 50% of the French people have a good opinion of their government whereas 46% have a bad opinion (4% are undecided). In Germany, the government gathers 73% favorable opinion and 23% unfavorable opinions (4% were undecided). Yet, in 2013 public (...)

The Stimulus Does Not Work

The crisis of the world economy since 2008 has encouraged various governments to increase the share of public spending. This increase was a general phenomenon among the OECD countries and contributed to an unprecedented debt hike. An IREF study comparing the development of key economic (...)

Germany : Less Welfare State, More Electoral Victories

Reforming is a path for reelection: German Chancellor Angela Merkel privatized, deregulated, capitalized. She did not reflate nor accepted deficits : she reduced taxes. For sure, there are some lessons to learn for France.

Legitimacy and The Cost of Government

WP 2013-05 Legitimacy and The Cost of Government by • Niclas Berggren • Christian Bjørnskov • David Lipka

Dutch King Willem Alexander Ends The Welfare State
John Galt in The Netherlands?

"A nation with a small but strong government which gives people the space they need": this what Dutch King Wilhem-Alexander wants for his people. And it has become a domestic policy on September 17th, 2013. The King has a life-time in front of him to consider the social, economic and political (...)

Latvia : The Only EU Country Meeting The Maastricht Criteria

This little county on the shores of the Baltic Sea will become the 18th member of the Eurozone. That is well deserved since Latvia meets all of the Maastricht criteria. Its public debt amount to 40% of its GDP compare to 70% in Germany and 90% in the Eurozone. The maximum public debt rate (...)

110 Billion Euros Waste: The Cost Of Inefficient French Government’s Assistance to Companies

The French Government supporting private companies thanks a system of financial assistance: what an economic heresy! Yet, over the last thirty years, it has become the creed for French Governments, whether conservative of leftist. Four figures are to be pointed (...)

June’13 Newsletter: New Members Join The European Union, While Bail-Outs And Banking Regulation Are Questioned

Welcome to the clubs! Why should they join?
The crisis is not over and doubts about the virtues of the EU and the euro abound. It may therefore seem surprising that not only are more countries seeking to join the EU, but also that some are joining the currency union. Croatia accedes on July (...)

10.8 Billion Euros Missing On The French Budget

“If I have less money, I shouldn’t spend less but tax more”. That is exactly what the French President François Hollande and his Government are doing. Economic principles are obviously upside down. That is the result of socialist economic policies denying reality: the French budget was established (...)

Public Spending Has No Impact On Economic Growth
This an IREF study of 30 countries from 1997 to present.

Over 30 to 35% og GDP, except in Scandinavian countries, taxpayers refuse to cover public spending over a 70% threshold. Governemts that have high public spending are entrapped in deficit and debt. Stimulus policies failed. True economic stimulus can be found by less regulation and less public (...)

The European Quagmire

The European Commission’s forecasts are gloomy: a 0.1% decrease of European GDP in 2013 as a 0.4% decrease for the Eurozone. It seems that, one after the other, all the member states are collapsing and get trapped into economical disarray. The European Commission gives more time for France and (...)

The Receipt for Government Services for 2013

Richard Durana, Ph.D, director of Institute of Economic and Social Studies (INESS) has annouced that INESS released the Receipt for Government Services for 2013.
The annual price of the state for Slovakia increased by EUR 322 (7.3%) and reached EUR 4,704 per (...)

The Public Spending Trend Hampers The Economy

France is the best example of this economic truth. The French public sector is undermining the economy. It must be pointed out that in Spain and Ireland the crisis was due to a real-estate bubble. In France, the crisis is worsened by an obese bureaucracy. The trend is striking: the French (...)

The Iron Lady: A Transformational Premiership

“She did not just lead our country; she saved our country” said British Conservative Prime Minister David Cameron as a tribute Margaret Thatcher who died at 87, on April 8th, 2013. Tony Blair, former British Labor Prime Minister, declared: “Very few leaders get to change not only the political (...)

Small Governemnt vs Corruption

Corruption! A word that is destroying the base of the Government action. Above the “Cahuzac Case”, it is the whole public power that is stained with doubt and distrust. The clear and present danger is the rise of uncontrolled populisms seeking the collapse of a corrupt Government. But this would (...)

Pay Slips: 6 lines in Germany, 20 lines in France

6 lines against 20! In Germany, the gross salary is taxed by only few contributions (tax on salaries, solidarity, pension fee, Church). It was understood that flexibility is much more efficient with a fiscal and regulatory simplification.
In France, it is the exact opposite. The French pay (...)

The Civil Servants’ Working Time

The IREF figures on civil servants’ working time in the OECD countries were quoted in the radio show "Carrément Brunet" on RMC.

In France the legislative process is hijacked by those who depend on public money

Between 3 and 5 per cent of the members of Parliament, and 6 per cent of the senators: the parliamentarians with a background in business represent a tiny minority. An IREF study shows the contrast with four other countries where economic legislation is handled by people who know what it means. (...)

4.9 billion euros

43 billion Swedish crowns . As stated by the Waste Ombudsman (Swedish Taxpayers’ Association), this is the amount erroneously paid out by the EU according to its Court of Auditors. These payments represent more than twice the amount that Swedish taxpayers send to Brussels every year.
For the (...)

Identifying the Determinants of Judicial Performance: Taxpayers’ Money well spent?
By Stefan Voigt and Nora el Bialy

There has been a sizeable number of studies trying to identify the determinants of judicial performance on the country level. Such a design is appropriate to identify underperforming single judges or underperforming courts or court districts. But it is not appropriate to identify institutions (...)

The German taxpayers’ association demands a rebate

As tax revenues are flooding into the Treasury, the German taxpayers’ association (BdSt) has asked the federal government to axe the "stealth" tax increases and to cut spending further. Current estimates show that tax revenues will be substantially higher than previously thought: a record 600 (...)

French budget 2013: IREF moves to appeal to the Constitutional Council

IREF has examined the provisions of the French government’s 2013 budget proposal, and concludes that these are confiscatory and arbitrary. Henceforth taxpayers will be subject to taxation on revenues of which they do not dispose, and forced to pay taxes that are above the corresponding incomes. (...)

The greatest achievement of French statism: high unemployment

By Nicolas Lecaussin
Can you imagine that unemployment has been “priority number one” for French politicians over the past 35 years! Left, right and center have all claimed that their first objective was to reduce unemployment, in particular among young people. Yet they have failed every time. (...)

The same euro mistake under a different name

Despite being bombed by information, it seems we have forgotten the roots of the debt crisis. Instead we play a martingale game, where the only precaution after losing a round is to double the bet for the next one. The solution is not called EFSM, EFSF, ESM, SMP, OMT or banking union. These are (...)

A Plan for Sound Money

In response to the financial crisis in the euro zone, the Lithuanian Free Market Institute (LFMI) has worked out and submitted to public institutions a plan which would help countries potentially exiting the euro zone to build stable and sound money. LFMI‘s proposal can be also used by the euro (...)

€62 Billion

is the amount needed by Spanish banks to avoid the clash, revealed the Spanish government last week. This is supposed to be good news for European taxpayers who will have to rescue Spain with their tax money. Indeed, the initial estimation was about €100 (...)

When the Lights Go Out: Europe in an Age of Austerity

WP 2012-03 When the Lights Go Out: Europe in an Age of Austerity by • Vani K. Borooah

The French alternative to austerity

The French Cour des Comptes (National Audit Office) published this Monday a new report on public finances. Without surprise, the ambition to limit the budget deficit to 4.4% of GDP in 2012 is confirmed to be unrealistic. An extra six to ten billion euro would be necessary in order to meet this (...)

Ireland on the way to recovery

This paper is excerpted from the forthcoming "IREF’s Yearbook on Taxation" 2012
In an unprecedented and historical move, the European Union forced the Irish government against its stated wishes to indebt itself in an € 85 billion international bailout comprising of the IMF, EU and bilateral (...)

IMF Director Christine Lagarde giving lessons to Greek people

In an interview with the Guardian, Madam Lagarde says it is time for Greece to pay back and insists on the fairness of it – “Greeks have to pay taxes now and assume their past mistakes,” she says, adding that “As far as Athens is concerned, I also think about all those people who are trying to (...)


This is the decrease in the rate of economic growth per capita that results from an increase in the tax revenue to GDP ratio by 10 percentage points. This is one of the findings of a study released by The Centre for Policy Studies from the UK, revealing significant statistical relationship (...)

Fiscal Rules vs. Political Culture as Determinants of Soft Budget Spending Behaviors

Executive Summary
The main purpose of this paper is to investigate whether, and to which extent, the rules introduced by central governments effectively restrain the spending behaviour of the decentralized authorities. In this paper, the authors provide an innovative comparative analysis by (...)

$ 4 trillion

This is the US debt reduction over the next 10 years claimed in President Obama’s latest budget proposal. After careful examination of this amount it appears nevertheless that the spending cuts composing this amount are at least "surprising". To read more about the Obama’s budget proposal see (...)

The Price of The State

We all receive from and give to the State. But exactly how much ? An initiative from INESS, a slovakian think tank, helps citizen to quickly get an approximation of the price of the state to them.

Bank regulation: Troubleshooter or Troublemaker?

A widespread understanding of the 2007-2008 crisis places the origins of the crisis in a capture of global economy by the finance industry. The “occupy Wall Street” group would surely agree, as well as most of those who get their economics from the general media. And President Sarkozy in his (...)

$ 1.543 billion

is the amount of exposition of French banks to European countries’ private and public debt. They own for instance $106 billion of Italian public debt (which is six times higher than the amount held in Greek bonds), while $230 billion are held in Belgian government bonds. France is therefore (...)

Is Germany untouchable?

Until now, the debt crisis seemed to spare the biggest European economy. But the country everybody is relying on starts to meet difficulties to refund its debt. The sale of German benchmark bonds on Wednesday turned to a disaster and the Bundesbank has been forced to hold on to record amounts (...)

€ 3 billion

This is the annual cost of one percentage point increase of the interest rates on French government bonds, according to the credit rating agency Moody’s. France is currently facing 2% higher rate for 10 years bonds than Germany, which is the unprecedented gap between the two countries’ interest (...)

Concern over future tax rates is one of the main reasons for reduced investor confidence

A must-read piece by Alan Meltzer in The Wall Street Journal explains why the economic response to increased government spending is so different from the response predicted by Keynesian models. By creating uncertainty about future tax policies, excessive regulation and redistribution, (...)

€55 bn

Germany has raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that "Germany is €55bn richer than it previously thought because of an accounting error at state-owned bank Hypo Real Estate Holding. Germany’s 2010 debt-to-GDP (...)

French austerity measures – more taxes and unconvincing plans to balance the budget

For the French government, it is more than ever urgent to convince everyone that the State deficit is moving in the right direction and the public debt is sustainable. In the context of an uncertain future for the French credit rating triple A note, the present debate on the budget of the State (...)

Standard & Poor’s has cut Italy’s credit rating

The eurozone’s third-largest economy is being sucked deeper into the sovereign debt crisis, since one of the major credit rating agencies downgraded yesterday its credit rating. S&P downgraded Italy to "A/A-1" from a "A+/A-1+" grade because of "Italy’s weakening economic growth prospects", (...)

G7 – in search of equilibrium

The French Minister of Finance, François Baroin, concluded the G7 meeting in Marseille with a statement that an equilibrium had been found between the necessity for fiscal consolidation and the necessity to avoid a recession. What kind of equilibrium is he talking about and is this equilibrium (...)

What’s the Matter With the French Banks?

The French bank BNP Paribas published a disclaimer to this article signed by our Director of development Nicolas Lecaussin and published in the Wall Street Journal. The paper is mentioning the difficulties of some of the French banks, including (...)

Market Crises Versus Sovereign Crises

This article first appeared in the Wall Street Journal
Markets always make good scapegoats. When they do well, they are populated by profiteers. When they do badly, they are accused of causing trouble for everyone else.The denizens of the Dow, Nasdaq, CAC and DAX floors may be speculators and (...)

A new world

The world is probably going to change after the recent downgrading by Standard&Poor’s of the US debt rating from triple A to AA+. Beyond the disturbing loss of the landmark Treasuries represented for global finance, what is important here is the awareness that even the biggest world economy (...)

USA sovereign debt rating downgraded

Standard&Poor’s, one of the three major credit rating agencies downgraded on Friday the USA credit rating, previously noted AAA, the highest possible level. The new rating AA+ is translating the worry of experts about the sustainability of US public finances, in the context of ever (...)

€ 43 billion

is the amount that a new austerity plan is supposed to save to Italian public finances. The plan aims to bring Italy’s public deficit down to 0.2% of GDP by 2014 from 4.6 per cent in 2010 and to calm investors worried about Italian public (...)

Who should pay for Greek’s mess?

After a huge transfer-loan of €110 billion last year, Greece is once again pending on EU-IMF charity in order to avoid default, or at least, to benefit from a smooth default (assuming such a thing exists). Meanwhile, the Greek economy is paralyzed and tensions grow inside Greece as well as in (...)

€ 330 billion

This is the amount of the public debt of Greece. Officials from the Eurozone are debating right now the possibility to accord additional money to the Greek government in a desperate try to avoid a debt default.

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