European Comparisons

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.

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…

In 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 estate markets or inflated construction sector. After the 2008 crisis, the relatively low Slovak debt of 35.4% GDP does not attract as much attention as countries around the Mediterranean Sea or Ireland.

No, this is not a joke, but one of the suggestions of the very serious and very official report that the French President Sarkozy commissioned to the Nobel laureate Joseph Stiglitz. Indeed, according to the figures presented by the headed by Stiglitz Commission on the Measurement of Economic Performance and Social Progress, the traditional disposable income measure, which estimates income per capita in France to be only 66% of income in the US, is inadequate.

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 is more than doubled since 1980. Looking at the time-series since the mid-1970s (e.g. Sachverständigenrat 2009, p. 373), one can infer that the responsibility for this long-term increase falls both to the federal and state governments, with the impact of the former being about three times as large as the impact of the latter. One can also infer that, after the Keynesian fiscal policy experiments in the 1970s, the debt-to-GDP ratio stagnated for much of the 1980s, and increased again in the early 1990s following the German re-unification. Following periods of stagnation are then punctuated by the end of the internet bubble at the beginning of the last decade, and by the recession following the most recent financial crisis.

The newly reappointed President of the European Commission José Manuel Barroso asked the former EU Competition Commissar Mario Monti to draw a report and advance “options and recommendations” to re-launch the European Union internal market. Istituo Bruno Leoni, Italy, recently published a critical appraisal of the Monti report. Our Director of research, Pierre Garello, contributed to this analysis of the propositions currently in vogue in Brussels.

In 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 for sustainable economic growth. Although there is some progress in implementation of structural reforms (as opposed to time wasted in 2005-2007), in our opinion fiscal challenges are still not addressed sufficiently.

Romanian 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 presented elsewhere some of the problems faced by Romania during its transition (see the reports for Romania in IREF’s yearbooks on taxtion). We will here limit ourselves to problems related to current budgetary difficulties. In short, Romania’s deficit is the result of many errors on the expenditure side as well as on the revenues side of its consolidated budget. Similar errors are still made today.

According to a poll by TNS Sofres, 2/3 of French people confess to have had any training courses in economics at school or at the University. Only one in ten…

Portugal 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 causes for this phenomenon.