Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
and economic freedom


Petr Barton

Articles by this author (96) :

How fiscal policy of the 1400s created Industrial Revolution in the 1800s

How fiscal policy of the 1400s created Industrial Revolution in the 1800sThe Nobel-Laureate Douglass North passed away at the end of November. Though he didn’t specialise in fiscal questions, his analysis of institutions in early modern Europe reveals that actual fiscal choices about how to finance an army help to determine the fortunes and falls of European powers. (...)

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

No Schwexit, at least for now.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.

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 (...)

UK government is wrong. 5p for plastic bags *is* a tax. And it’s badly designed.

UK government is wrong. 5p for plastic bags *is* a tax. And it's badly designed.At the beginning of October, England became the last constituent part of the United Kingdom to introduce a compulsory charge for plastic shopping bags (to be paid by the shopper), after similar taxes had been introduced in Scotland, Wales and Northern Ireland in previous years. The relevant (...)

How taxes have created the cheating Volkswagen

How taxes have created the cheating VolkswagenStrange behaviours are often caused by strange taxes or subsidies. The strange behaviour of Volkswagen believing it could cheat and not get found out was motivated partly by the strange tax/subsidy policies in Europe which subsidised diesel at the cost of petrol (...)

Improving the environment in the EU: taxation does not work, property rights do.

Improving the environment in the EU: taxation does not work, property rights do.Two routes exist in theory towards making people behave more environmentally: through taxation, and through better defining and upholding of property rights. Empirical evidence suggests that at least in the EU, environmental taxation does not seem to work. Greater reliance on property rights (...)

Press Independence, State Broadcasters, and Safeguard Against Power Abuse

Press Independence, State Broadcasters, and Safeguard Against Power AbuseAn essential component of a free society is independent press. It plays a central role in preventing both state actors and private interest groups from pursuing their own interests through state power too aggressively. Journalists independent from political and economic power work effectively (...)

Grab on African resources deepens. Not by China, but by the EU.

Grab on African resources deepens. Not by China, but by the EU.The best way how rich countries can help the poorer ones has always been to teach them how to fish. Not giving them fish. And certainly not taking fish away from them.
Yet this is what the EU has been doing since the 1970s, and in September it has renewed three multi-year greatly underpriced (...)

EU has given a new meaning to the idea of "Fair Taxes"

EU has given a new meaning to the idea of "Fair Taxes""Fair tax(es)" is a beautiful idea everybody wants to subscribe to. Including, of course, modern EU politicians. Their idea of "fair tax", however, differs very much from the way in which people understood the concept in the past.
It is no longer about making sure the tax is fair to the (...)

Subsidies: the real reason why foreigners cannot own land

Subsidies: the real reason why foreigners cannot own landIt 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 - (...)

Can governments really save money by creating disasters abroad?

Can governments really save money by creating disasters abroad?A new study from a German economics institute claims that the German state has already made €100bn from the Greek crisis as lenders flee from Greece into the safe haven of German government bonds, reducing their interest rate and saving the German government money on debt interest payments. (...)

Slovak government decides to prove that Marx was right
7 Lessons about Governments Bedding Big Business

Slovak government decides to prove that Marx was rightEach employed Slovak worker will pay about a week’s take-home pay in extra taxes so that their government can bribe Jaguar into creating a few jobs located in Slovakia (for a while). We present lessons this teaches us, one for each day of such (...)

Next tax on the menu in the EU: tax on meat.

Next tax on the menu in the EU: tax on meat.The imagination of EU governments to come up with new kinds of tax is apparently inexhaustible. Tax on meat is now being prepared, as an answer to alleged “problems” with meat production and consumption. But taxes are generally bad solutions to “problems”, especially when those problems are created (...)

Minimum wage increases employment! (But not of humans).

Minimum wage increases employment! (But not of humans).It’s not just USA who is raising minimum wages significantly. New or increased minimum wages are spreading all across the EU, too (e.g. Germany, UK, Portugal..). If we take McDonald’s as a symbol of "minimum wage jobs", which governments are working the hardest to deprive such workers of any job (...)

Just How Do Greek Taxes Differ From the Rest of the OECD?

Just How Do Greek Taxes Differ From the Rest of the OECD?If it wasn’t obvious already, Greeks do their taxes differently.. They rely more than is customary in OECD on the less visible taxes of VAT and Social Security. Income tax revenue (from people and companies) is much less prominent. If they are risking a lot less, it time to try to actually lower (...)

Hungary vs. Czechia: new taxes discriminate and favour big business

Hungary vs. Czechia: new taxes discriminate and favour big businessNew retail tax in Hungary discriminates big business, which just happens to coincide with the finance minister’s nationalistic interest. New retail tax in Czechia favours big business, which just happens to coincide with the finance minister’s business interest. Curious thing, (...)

It’s almost official. Bitcoin will be VAT-exempt in the EU

It's almost official. Bitcoin will be VAT-exempt in the EUYou’ve heard of Bitcoin. Is it primarily a currency or a service?
Its users probably could not care less; for many it will be both. Yet a distinction is necessary. Why? Well, taxes, of course! What else?
If it is primarily a currency, buying or selling bitcoin (exchanging it for your (...)

Greeks hate it when people actually pay their taxes
Are Germans the redeemer or destroyer of the Greek tax system?

Greeks hate it when people actually pay their taxesTwo recent stories from Greece reveal very different treatments of Germans paying taxes in Greece – depending on whether they are people or corporations.

Propaganda Wars: interest on Greek debt is not "profit"

Propaganda Wars: interest on Greek debt is not "profit"Greece failed to pay a 1.5 billion installment by the end of June. The rhetoric has long portrayed the lenders as fat cats living off Greece’s misery. Varoufakis had his sight on 1.9 billion which he called “ECB’s profiteering on poor Greeks” and should be “returned” to the Greeks to cover the IMF (...)

EU’s tax haven blacklist: created by black magic method

EU's tax haven blacklist: created by black magic methodHow do you make a credible list of countries whose tax policies you don’t agree with? Do you ask only half of your members, let them decide their own criteria, and have it approved by a few interest groups? If you are the EU, then (...)

The “Other” European Banana Problem

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 (...)

Social policy cannot pursue social good, says the ECJ

Social policy cannot pursue social good, says the ECJSo you thought you could have your cake and eat it. That you reduce tax on something which has benefitial implications for a disadvantaged social group, saves resources and is good for the environment. Think again, says the EU Court. Your young ones are, apparently, not a legitimate aim of (...)

EU has too much money: The Proof

EU has too much money: The ProofHow 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 (...)

Greece cannot save itself by taxing exports
Summer in Greece? Silly taxes ahead.

Greece cannot save itself by taxing exportsIn all epochs, exports were almost always considered good for an economy. That’s why modern governments have generally stayed away from trying to tax exports. Not so the current Greek government, however. By increasing the tax rate on a vital component of Greek exports it is hoping to raise some (...)

What’s Wrong With | increasing budget for EU Parliamentary assistants

What's Wrong With | increasing budget for EU Parliamentary assistants European Parliament has just voted to increase the budget each MEP can spend on their assistants. This can hardly be justified. Worse, it can increase the deluge of new regulations.

EU should not encourage Nigeria to increase income taxes. (Or anyone else.)

EU should not encourage Nigeria to increase income taxes. (Or anyone else.)International institutions like IMF or World Bank do often give economic policy advice to poorer countries, but generally only after thorough analysis. EU does not specialise in such anaislys, and its diplomats should avoid dispensing such unfounded advice (...)

It is not Brexit that endangers sovereign debt

It is not Brexit that endangers sovereign debtThere 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.

6 reasons to worry about inconclusive UK election
Political instability tends to worsen national debt

6 reasons to worry about inconclusive UK electionUK might not get a single party government after next month’s election. Again. Moody’s are not worried about the consequences for government finances. They probably should be.

What’s Wrong With | Greek death tax uncharitable to foreigners
Greek death tax uncharitable to foreigners

What's Wrong With | Greek death tax uncharitable to foreignersSay you want to pass your wealth to others after you die, since you cannot take it with you. If you pass it to friends and family, many (18) EU governments will take a hefty portion of it in inheritance tax. If you pass it to a charity, most governments won’t charge you tax. If you pass it to a (...)

Have you paid your tax? Belgian taxman won’t believe you.

Have you paid your tax? Belgian taxman won't believe you.In the Middle Ages in the Middle East, merchants and travellers would sometimes have a proof of having paid their tax tattooed on their necks, to prove that they don’t have to pay again. Modern EU has devised a less painful alternative – a “Portable Document A1”. It is automatically recognised (...)

Actual business tax? Almost half of profits in almost half of EU
Businesses pay a lot more than just corporate income tax.

Actual business tax? Almost half of profits in almost half of EUThe impression from media is that companies pay “only” somewhere around 20-30% tax rate in the EU, if they pay at all. That’s only the headline figure for one tax they pay. Total tax rates are well over 40%, French businesses pay 2/3 of their profits in tax. What’s worse, the big economies of (...)

EU’s complicated tax forms, measured

EU's complicated tax forms, measuredBusinesses both pay taxes and collect them from others for the government. How administratively burdensome is this activity across the EU, North American and EFTA? We assess the evidence and identify, whether it is the frequency of filing or complicated tax returns that (...)

Text in e-books is irrelevant, says highest EU court

Text in e-books is irrelevant, says highest EU courtThe European Court of Justice (ECJ) ruled last Thursday that e-books are not allowed to enjoy the lower VAT that “normal” books enjoy in some EU states, and that they have to be taxed at the standard (much higher) rate of other goods. The ECJ’s justification sounds strange and very (...)

The new Greek (Secret) Tax Police

The new Greek (Secret) Tax PoliceIf you are playing for time, you have to swamp your creditors with proposals how you are going to improve. “This time it’ll work, honest, guv.” So the Greek government is now proposing a secret tax police, where ordinary citizens would be wired with cameras and microphones to catch tax evaders. (...)

February’15 Assessment of Commision’s Legal Action

February'15 Assessment of Commision's Legal ActionWe are continuing our assessments of monthly packages of legal actions initiated by the European Commission against member states. Unfortunately, no information was made available by the EC since our November assessment until the current February package. At the beginning of December, the next (...)

Planned Obsolescence: a tax with strange effect on economy

Planned Obsolescence: a tax with strange effect on economyThe French government is hoping to help consumers – and increase growth – by making it illegal to manufacture products with artificially shortened lifetime. We argue that proving such case will be nearly impossible in modern technology and the ban will act as a tax, with consequences even worse (...)

A guide to the world of negative interest rates

A guide to the world of negative interest ratesNegative interest rates here, there, everywhere. What used to be taught as "impossible" in textbook is now a reality throughout the EU. And for the first time it even affects corporate bonds, not just "safe" sovereign ones. Why would anyone lend more than they receive, when they can just hang (...)

Croatian government has just grown bigger. And more sinister.

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 (...)

After banks and governments, now individuals want money for “unforeseen circumstances”

After banks and governments, now individuals want money for “unforeseen circumstances”Earlier this week, Russian borrowers with Euro or Dollar mortgages called upon Putin to relieve them of their now increased interest payments. Banks should bear the costs, whilst the borrowers bore the benefits until now. We show that this bailout is just a repeated story of bank and government (...)

Greek debt servicing is not at all crippling

Greek debt servicing is not at all cripplingGreece is said to be suffering under crippling burden of debt servicing. However, the official debt servicing is already lower than in other EU countries with much smaller debts. Furthermore, the actual interest payments payable by Greece are close to those that Germany is having to make on its (...)

TTIP: ending some protections while creating others?

TTIP: ending some protections while creating others?Transatlantic Trade and Investment negotiations are resuming. Popular support varies across Europe, we identify four distinct groups. Removing trade protectionism will generally benefit ordinary people. However, some protectionism may increase, especially in investment chapters. If governments (...)

New rules encourage EU governments’ profligacy

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 (...)

Economic freedom down in Eurozone, up in non-Euro countries

Economic freedom down in Eurozone, up in non-Euro countries9 EU countries have not adopted the Euro, 19 have. Both groups include similar proportions of countries with high, medium and low levels of economic freedom. However, IREF’s investigation of what has been happening to economic freedom in the two groups reveals significant differences. While (...)

3 French Hens
Twelve Days of Fiscal Christmas

3 French HensThis article is from our mini-series looking at modern fiscal issues surrounding items listed in the famous 18th century English carol “Twelve Days of Christmas”. We believe that if the list can be used as an index measure of monetary inflation, it can equally well be used as an indicator of how (...)

2 Turtle Doves
Twelve Days of Fiscal Christmas

2 Turtle DovesTo 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

1 Partridge in a Pear TreeA 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

ECJ ruling strengthens European Welfare StatesNew 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 (...)

Financial Transaction Tax cannot deliver

Financial Transaction Tax cannot deliverFree movement of people, capital, goods and services across national borders. Those are, allegedly, the pillars of European integration. One of them, the free movement of capital, crossed swords twice this week with EU policy makers convened at the regular meeting of financial ministers. It (...)

Increasing Tax Withholding? Bad Idea

Increasing Tax Withholding? Bad Idea"In order to prevent tax fraud, income tax withholding should be increased so that governments over-withhold and most taxpayers receive a refund." This is the policy prescription in a new research about to be published. We argue that this conclusion is wrong. The authors have not proven the (...)

November’14 Assessment of Commision’s Legal Action

November'14 Assessment of Commision's Legal ActionEvery 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 (...)

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