Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Fiscal competition
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Fiscal news from Germany

Fiscal news from GermanyAs we have reported here in last year’s IREF Yearbook on taxation, the German government that has been newly elected in autumn 2009 did have plans for a comprehensive tax reform. These plans included the introduction of an income tax schedule with stepwise increasing marginal tax rates, and (...)

Poland: Unjustified political opportunism

Poland: Unjustified political opportunismIn 2010 the public deficit in Poland reached at least 7.9% of GDP. The public debt, in turn, balanced around 55% of GDP. In order to rescue public finance, the Polish government announced end of 2010 the dismantling of the reform of pension system. In the opinion of Polish authorities, this (...)

Energy and Environmental Taxation: Theory and Practice within the EU

Energy and Environmental Taxation: Theory and Practice within the EUEnvironmental tax reforms have a history of almost two decades and were viewed as a way to the better world the “double-dividend” theory predicted. Much “political capital” has been invested in policies leading to environmental tax reforms on European and national levels from 1992 (the year of the (...)

The fallacy of low taxes in Spain: A comparative study of taxation

The fallacy of low taxes in Spain: A comparative study of taxationThe current Socialist (PSOE) government in Spain has claimed in different occasions that the low fiscal pressure that Spain has experienced in 2008 and 2009, gives policy-makers a large leeway to raise taxes. Besides, this measure has been supported as necessary in order to maintain –or improve- (...)

The eurozone debt crisis: how to avoid the tail wagging the dog

The eurozone debt crisis: how to avoid the tail wagging the dogWhile a resolution of the debt crisis currently facing the eurozone would be most welcome, it is not clear that the current discussion goes much beyond how to bailout member countries, and whether it should be the taxpayers of these countries, the German and French taxpayer or the holders of (...)

French Tax Law 2011 – what is going to change for the taxpayer

French Tax Law 2011 – what is going to change for the taxpayerAfter the huge increase of public deficits during the past two years, the French government is claiming the beginning of a new era and promises to limit the budget deficit to 6 GDP points in 2011 (down from 7.7% in 2010). If this 1.7 GDP points reduction of deficit is reached, it will be the (...)

The informers’ new era

The informers' new eraTo denounce others to Authorities is unfortunately a frequent behavior that responds to the basest instincts of human beings: the desire for revenge, jealousy, collaboration with the ruling power.

Impact of the French 2006 cut in personal income tax rate on tax revenues

Impact of the French 2006 cut in personal income tax rate on tax revenuesIn 2006 a major change was implemented in France regarding the income tax. Not only the top marginal rate was lowered (from 48.09% to 40.00%), but the same treatment was applied to the other rates. Also, the number of brackets was reduced from 7 to 5. As a result, whatever the level of taxable (...)

The levels of public deficits in new member States are more worrying than it looks but a tax rate increase is no solution—the case of Slovakia

The levels of public deficits in new member States are more worrying than it looks but a tax rate increase is no solution—the case of SlovakiaIn Slovakia, the economic growth has been one of the strongest in the EU over the period 2004-2008 and it came with soaring tax revenues. This growth itself was the by-product of several important reforms, especially the tax reform. It was based on real investments, not on speculation on real (...)

Public Debt in Germany: Will the Debt Brake Change the Trend?

Public Debt in Germany: Will the Debt Brake Change the Trend?Like in most European economies, public debt in Germany is characterized by a secular upward trend. There are reasons to believe that the current trend is not sustainable. The ratio of debt to GDP is expected to reach 76,5 percent this year (Deutsche Bundesbank 2010), which implies a ratio that (...)

The French Public Debt – Worries and Solutions

The French Public Debt – Worries and SolutionsIn the context of debt crisis in the European Union, the French public debt finally attracts the attention of the government. Is the situation still under control and is there a chance for French authorities to limit the deterioration of public finances? To answer the question, Vesselina (...)

Poland: Time to come down from the clouds and face reality

Poland: Time to come down from the clouds and face realityIn 2009 Poland was the only country in the European Union (EU) with positive economic growth. This was a result of both good policy and favorable circumstances. In 2010 Poland is no longer the sole “green island” of growth in EU. Furthermore, the state of public finance is a growing risk factor (...)

A Romanian “fiscal diary” or How not to make a fiscal reform

A Romanian “fiscal diary” or How not to make a fiscal reformRomanian government took recently more and more controversial measures. Many of them are officially presented as a consequence of the economic and financial global crisis. Actually, they are the consequence of ill-conceived, poorly-explained and incoherently applied fiscal reforms. We have (...)

In those times of public finance distress let us remember how the Iron Lady did it

In those times of public finance distress let us remember how the Iron Lady did it„We reform firmly, gradually and effectively” said Poland’s Finance Minister, refuting accusations that his government is postponing important reforms to public finances until after the next parliamentary elections, expected for 2011. And yet these reforms can be summed up in only in one way: they (...)

Energy Policy and Energy Taxation in the EU

Energy Policy and Energy Taxation in the EUThis report offers a survey of EU energy taxation scheme and provides some insights on the possible outcomes of current EU policy in the energy domain. The authors are reviewing the existing legislation, namely the Council Directive 2003/96/EC and are analyzing the possible economic ground for (...)

Portuguese Companies continue to evade Corporate Tax

Portuguese Companies continue to evade Corporate TaxPortugal has a long tradition of corporate tax evasion. Perception of high tax burden, social tolerance to fraud and evasion, high psychological fiscal pressure* , instability and insecurity of the tax codes and complex and slow fiscal system are the factors usually pointed as the ultimate (...)

Phoney fiscal austerity in the United Kingdom

Phoney fiscal austerity in the United Kingdom2009/2010 has been a period of phoney fiscalism in the United Kingdom. The period is sandwiched between the economic crisis, which put fiscal policy onto an emergency, macro-economic footing and an election (May 6th 2010). Economic crisis has been marked in the UK as in most other countries by (...)

Profitable Fiscal Competition

Profitable Fiscal CompetitionIt’s not unusual to hear people criticise the fiscal competition states engage in, pretending that such practices lead to losses in tax revenues. In this matter, the expression “harmful fiscal competition”, which is notably retained by the European Union, is often used, though sometimes (...)

Some hot fiscal issues in the fall

Some hot fiscal issues in the fallLooking for budget savings
Some analysts are suspecting that the current fragile economic recovery will be damaged by the policy of government spending cuts that many countries undertook in order to reduce their public budget deficits. The debate is perfervid, in particular in the US where (...)

France’s Worst Enemy

This paper appeared in The Wall Street Journal.
When the economic crisis struck in 2008, the French government assured its citizens that our social model would protect and cushion us; that we would not be hit nearly as hard as other countries in the downturn.
Two years later, one can hardly (...)

Government employees win, private employees loose

Government employees win, private employees looseThe economic crisis is far from having created only victims. In France and all abroad, government employees didn’t suffer from the recession at all.
The last data from Eurostat are evidencing that during the crisis the share of government payments for salaries became a bigger part of government (...)

Tax competition or tax harmonization?

Tax competition or tax harmonization?Following the last visit to Paris of the German Minister of Finances Wolfgang Schäuble, the French and German governments have decided to harmonize their tax systems. Both sides have emphasised the positive impact that such a harmonization could have on the economic growth in Europe and on the (...)

France’s new policy to ease “access to ownership” shows once again the prevailing fallacy of the planed recovery

The French Minister of Economy, Christine Lagarde, recently announced that the government will stimulate the housing market in an attempt to boost the economy. “Building and construction industry is a key sector, with important multiplier effect on the whole economy”, says Lagarde, “Our aim is to (...)

Don’t let anyone tell you there is nothing Greece could do!

Don't let anyone tell you there is nothing Greece could do!It is summertime and everyone is happy to take a brake from what has been a terribly tormented spring. Many of our European politicians and policy advisers (IMF) feel satisfied—or at least claim to be—that they have done the right thing and kept the boat afloat. Now, they say, we just have to (...)

Lower taxes for stronger economic growth

Lower taxes for stronger economic growthFor getting out of the public finance crisis it is a good thing to cut on spending. To reform the public sector is even better. But is it also necessary to increase taxes? With few others, Jean Philippe Delsol, administrator of IREF, had developed the conviction from past experience that one (...)

Incentives matter

Incentives matterQuestion: Mr. President announces that, starting in 2011, there will be a sharp increase in tax rates. What do you think individuals and businesses will do in 2010? Using basic economics, Arthur Laffer in a Wall Street Journal article dated June 6 gives us a very plausible scenario: Individuals (...)

Absurd tax on financial transactions

Absurd tax on financial transactionsA few years ago, the so-called Tobin tax, designed to hit financial operations, was called-for by anti-globalization groups such as ATTAC. Today, in Europe, some parties claiming strangely to be liberalist, including heads of State, support the introduction of this new compulsory levy. Of (...)

Fiscal scapegoats

Fiscal scapegoatsIn the recent past, many States resorted to public spending increases in order to boost their shaky economies. At present, they have to face great deficits. They believed, no doubt, that there is no need to obey to financial constraints, but the market reminded them that any debt has to be (...)

When Will the Eurozone Collapse?

When Will the Eurozone Collapse?As a long-standing critic of the concept of a single European currency, I have not rejoiced at the current problems in the eurozone that threaten the very survival of the euro. Before discussing the events surrounding the Greek debt crisis further, I must provide at least a working definition (...)

Taxation in Europe 2010

Taxation in Europe 2010IREF is presenting for the third consecutive year a unique report on taxation in Europe. You can find here expert analysis of the fiscal policy in 22 european countries, the most recent data and forecast for future developments. Summary by Professor Pierre (...)

Why the EU should think twice before granting a loan to Greece

Why the EU should think twice before granting a loan to GreeceThe disaster everyone feared for several months finally occurred yesterday – Greece’s credit rating was reduced to junk status and financial markets slumped. Moreover, Portugal’s debt has also been downgraded, Spanish stocks plunged more than four percentage points and in Italy it was difficult to (...)

Recently published official data on 2009 economic growth are showing disparities among EU countries

Recently published official data on 2009 economic growth are showing disparities among EU countriesLast week, Eurostat published the statistics on GDP growth for 2009 and it is without surprise that we read in the data a slowing down of economic growth for OECD countries. The average decrease in GDP points for EU countries is -4.2%. But this average is hiding some astonishing (...)

The tax cap about to be abandoned in France?

The tax cap about to be abandoned in France?Traditionally in France the rich are suspected to be responsible for every bad thing happening within the economy. The current crisis is no exception to the rule and many voices are heard saying that the rich should pay more taxes to redeem themselves from their sins that brought the (...)

Tea Party in the USA and its parallel in French politics

Tea Party in the USA and its parallel in French politicsIn the Boston Tea Party (Dec. 1773) local patriots dressed as Mohawk Indians and dumped the containers of tea into the harbor. The British parliament had passed the Tea Act to establish officials in major American cities to collect the new tax on tea (Americans had been buying tea from Dutch (...)

Public debt: aren’t we glad to rely on speculation and financial markets!

Constant attacks on tax havens and hedge funds by some politicians and statesmen is at least inappropriate. As a matter of fact, it is thanks to “speculators” that we have learnt about the pitiful state of public finance in several states (for example in Greece). On the other hand, international (...)

Nicolas Sarkozy’s Perestroika

Nicolas Sarkozy's PerestroikaThis article appeared in the Wall Street Journal on March 18, 2010
In the wake of his party’s crushing defeat in regional elections, it’s time to take stock of Nicolas Sarkozy’s presidency, three years on. As in the USSR between 1985 and 1991, France has of late experienced a period of (...)

Collecting the Wages of Fear

Collecting the Wages of FearThis article appeared in The Wall Street Journal on February 24, 2010
In the 20th century, we often heard the maxim, "the war is the health of the state." In the 21st, fear has become the health of the state. We are encouraged to fear all manner of things—for our finances, for our (...)

Tempting the Tipping Point

If governments continue to pile on more and more debt, when will they reach the tipping point? The Greeks appear to be close to the tipping point, and it is only a matter of time before other European countries, and eventually even the United States, begin their fiscal death spiral. The Greek (...)

Value-Added Tax: No Easy Fix for the Deficit

There is a growing call by backers of bigger government for Congress to impose a value-added tax (VAT) on top of all the other taxes Americans already pay. A VAT is similar to a national retail sales tax but is collected at every stage of business production until its entire burden ultimately (...)

The Factors and Motivations of Fiscal Stability - A Comparative Analysis of 26 Countries

There has been a rising academic debate on the sustainability of deficit spending and accumulated debt in governments across the globe. This correlates with a growing concern that excessive government deficits and accumulated debt will lead to unstable financial environments and a devalued (...)

Choosing the Nation’s Fiscal Future

In a joint report from the National Research Council and the National Academy of Public Administration, its authors, including AEI’s Joseph Antos, describe the United States’ fiscal outlook, asserting that the present budgetary path is unsustainable. If today’s policies, particularly those (...)

Bailing out the Banks Was Wrong, but New Tax Won’t Make It Right

The Obama administration has just proposed a new fee — otherwise known as a tax — on the country’s largest financial institutions. The tax aims to recover the difference between the bailout funds provided to these institutions a year and a half ago and the amounts ultimately returned to the (...)

Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics

Despite decades of repeated failure, President Obama and Congress continue to promote the myth that government can spend its way out of recession. Heritage Foundation economic policy expert Brian Riedl dispels the stimulus myth, lays out the evidence that government spending does not end (...)

Can Slovakia afford an increase in tax rates?

Can Slovakia afford an increase in tax rates?Recent study of the European Commission on taxation trends confirmed the position of Slovakia among the countries with the lowest tax burden in European Union. With total 29,4 % share on GDP, Slovak government imposed the second lowest taxes upon its economy in 2007. Share of direct taxes on (...)

Yearbook on Taxation 2009

Yearbook on Taxation 2009What is the current state of public finance in the EU countries? How did the various governments reacted to the crisis which developed in the second half of 2008? To what extent did it trigger a change in tax policy? IREF has asked scholars and experts from fifteen different EU countries to (...)

Yearbook on Taxation 2008

Yearbook on Taxation 2008Introduction by Pierre Garello, Director of the Research Department of IREF
We already knew what the general situation and trends are in the EU. Namely, that the EU- 27 is still the region of the world with the highest fiscal burden, that situations differ greatly among EU member states (with (...)

Les pauvres veulent plus de libertés et moins d’aides

Les individus pauvres font confiance au marché. C’est la principale conclusion qui ressort d’une récente étude de la Banque mondiale bizarrement passée sous silence par les médias français. Analyse de Nicolas Lecaussin

Taxation in Estonia

The system of taxation of corporate profits, introduced in 2000 in Estonia, is unique. Under this system the reinvested profit is not taxed, only the distributed profit is taxed. Thus, the taxation is shifted from the moment when profits are earned to the moment when profits are distributed to (...)

Fiscal decentralization in Ireland

Abstract: It has been observed that while the respective theoretical merits of fiscal centralisation and decentralisation are debatable, it is even more difficult to empirically assess the degree of centralisation that exists in the real world. In particular, there is no index of the degree of (...)

The Polish Case – fiscal decentralisation

Abstract: The idea to compare the fiscal decentralisation and trends in this respect in the European countries is a core for the IREF project. This means that the strict rules of measurement of this complex issue, as fiscal decentralisation is, should be applied to all fiscal systems. (...)

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