On Wednesday16 March 2011 the EU Commission published a proposal to introduce a Common Consolidated Corporate Tax Base (CCCTB). A few days earlier, on Friday 11 March, the heads of state of the Euro area almost agreed on a « Pact for the Euro » to save the common currency from financial meltdown and come to the rescue of delinquent members (an agreement that subsequently came unstitched). These two events did not appear to be linked, except in timing. But they both illustrated, each in their own way, what one could call the EU’s « Icarus Complex ».
The European Commission has recently relaunched the proposal for a common system for calculating the tax base of businesses operating in the EU. According to the officials, the aim is to significantly reduce the administrative burden, compliance costs and legal uncertainties that businesses in the EU currently face in having to comply with up to 27 different national systems for determining their taxable profits.
Last year discussions for introduction of the so-called fiscal board in Bulgaria led to a project of the “Financial Stability Pact” prepared by the Ministry of Finance and presented by Simeon Djankov (see here). The pact provides for fiscal rules which cannot be bypassed by a simple majority in parliament – probably with their enrollment in the Constitution.
The rules cover the traditional areas – deficit, debt, expenditures and revenues. The idea is good, but in this case the details are important.
Because the music stopped.
As Thatcher said, “They [socialists] always run out of other people’s money”. Portugal is now a perfect study case for this golden rule, with its quadruple-crisis.
This would be the annual interest on the USA public debt in 2021, according to the estimations made by the economist Veronique de Rugy. This number is nearly triple from…
No, this is not science fiction, but recent statistics from the most respectable Eurostat. With the exception of Cyprus and Luxembourg, France is the European country with the lowest value added by the industrial sector – 12.4% of GDP in 2009. To compare, the EU27 average is 18% of GDP and the number for Greece is reaching 13.3%, while some of the EU leading economies, like Germany, are scoring up at 22.2%. It is also interesting to notice the paradox that Germany is accounting for approximately the same number of enterprises per capita as France…
When reflecting on the causes of the current economic and financial crisis, the huge upsurge in private debt is one of the most cited reasons. Some people insist on blaming the private sector for this. According to them, the sustainability of its behavior has been clearly put into question by the recent events. But, what lies behind this exorbitant private indebtedness? This article is focusing on the Spanish case, with some references to the United States.
As 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 possibly only three rates of 10, 25 and 35 percent. There had already been some doubts last year that a majority for such an ambitious reform could be organized. And indeed, the conservative-liberal federal government was characterized by almost complete fiscal policy inertia in its first months.
News
What’s the difference between New Zealand and Singapore apart from a 6% GDP growth advantage for the latter?
Former Finance Minister of New Zealand, Hon Sir Roger Douglas, recently shared his analysis of the present situation in New Zealand, contrasting it with the lot of their neighbors from…
In 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 system (and especially its obligatory private component) is one of the major causes of the budget gap. This interpretation and the reform proposal, shifting majority of contributions currently allocated to fully funded private pension scheme (the second pillar to public pay-as-you-go long run, divide the Polish society and especially economists. The strongest and the most constructive opposition is led by prof. Leszek Balcerowicz – father of market economy in Poland.
