IREF

After 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 first time in 50 years that such an effort to restrict public spending ends with success. But will the government reached the target this time?

To 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.

According to various Internet sources, Irish banks would have borrowed €51bn from the Irish central bank by the end of December, under an obscure program listed in the balance sheet as “other assets”. That is, the Central bank has electronically printed up new currency units for Irish commercial banks, without issuing debt behind these actions. The actions of the Irish central bank are not ignored by Germany, but fall out of the area of official monetary policy and appear to involve money creation outside the normal control of the European Central Bank.

Pierre Garello’s note on the Impact of the French 2006 cut in personal income tax rate on tax revenues has been quoted in a paper published by LibertadDigital.com, the Spanish on-line economic journal. Angel Martin, author of the article and IREF fellow, explains why raising taxes may

According to the 2011 Index of Economic Freedom released by the Heritage Foundation and The Wall Street Journal, European nations continue to enjoy a great degree of economic freedom. But while three of the 10 freest economies in the world are European, only one – Switzerland, at No.5 – is rated as truly “free.”

This is the world economy real GDP expansion since 1980. It lifted hundreds of millions of people out of poverty.

Less than one month after the final vote of the 2011 Tax Law, members of the French government are revealing that there are projects for several important fiscal reforms in the following months.

The Commission has requested Spain, under EU state aid rules, to abolish a 2002 provision in its corporate tax that allows Spanish companies to amortise ‘financial goodwill’ deriving from acquisitions of shareholdings in companies in third countries. The Commission also asks for the recovery of any aid granted under this provision since 21 December 2007 where concrete legal obstacles to investment could not be demonstrated.

While governments are tempted to raise taxes on capital gain in order to reduce their public deficits, the study realized by the London based Adam Smith Institute explains why the temptation should be resisted. Based on clear economic reasoning and on evidence from the US, Australia and Canada, they show that there is a Laffer curve effect at work; one that is probably stronger than in the case of personal income tax. In other words: higher capital gains tax rates are very likely to give lower tax revenues.

In 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…