Documents European Commission 2 349 results

"One key objective of tax-based fiscal consolidations which is too often disregarded in public debate is to minimise economic distortions. This paper uses a computable general equilibrium model to gauge these potential distortions by calculating the marginal cost of public funds (MCF) for EU member states. We consider two specific tax categories which are often proposed as good candidates for efficiency-enhancing tax shifting policies: labour and green taxes. Our analysis suggests that the economic distortions provoked by labour taxes are significantly larger than for green taxes. This result suggests that a green-taxes oriented fiscal consolidation would be preferred to a labour-tax oriented one (assuming that both tax increases would yield the same tax revenues). This holds for all EU member states modelled and despite the fact that potential welfare enhancement through pollution abatement are cancelled-out. Nevertheless, this result is slightly less strong when one considers the spillover effects between countries, which are more pronounced (in relative terms) for green taxes. This suggests that the use of green taxes for fiscal consolidation would be more effective were there to be close coordination across EU countries. In addition the efficiency losses associated with labour taxes are also likely to be greater when labour markets are less flexible (from an efficiency-wage perspective), a result also found to a small extent for green taxes. This raises the possibility that undertaking structural reforms (especially in the labour market) would help to minimize the efficiency losses entailed by tax-driven fiscal consolidations."

"In its May 2005 the Group of Economic Policy Analysis (GEPA) discussed the issue of EU competitiveness and industrial location. At that meeting, a request was made for BEPA to prepare a report taking stock of the phenomena of delocalisation and outsourcing in particular and globalisation in general assessing their impact on the European economy and considering how potential challenges can be addressed.

This report - a draft of which was presented to the GEPA in September 2005 - is a response to this request. The report discusses EU trade patterns, reviews factors affecting industrial location decisions, reviews relevant evidence on globalisation and relocation and their impact in particular on employment and presents a set of policies aimed at improving the EU's competitiveness and its ability to address challenges emanating from these shocks."