O Intermitente<br> (So long, farewell, auf weidersehen, good-bye)

O Intermitente
(So long, farewell, auf weidersehen, good-bye)

sexta-feira, fevereiro 27, 2004

The Real Threat from the East

Este artigo da TechCentralStation explica porque é que, com a adesão dos países do Leste, os actuais membros da UE serão obrigados a liberalizar as suas Economias e a reduzir o peso do Estado nesta se querem continuar a ser competitivos. Torna-se também claro porque é que, ultimamente, surgem insistentemente propostas de "harmonização fiscal".

Most East European nations are implementing dramatic tax-rate reductions and fundamental tax reform. Several nations also have shifted toward private pension systems, thus lowering long-run government liabilities and greatly boosting the sustainability of pro-growth tax changes. Among the more prominent examples are:

* Slovakia has enacted a 19 percent flat tax for both individual and business income, and many forms of double-taxation -- such as the death tax -- have been repealed. The government also has created a private retirement system based on individual accounts.

* Hungary has reduced its corporate tax rate to 16 percent and has partially privatized its pension system.

* Poland has dropped its corporate tax rate to 19 percent and also implemented a flat tax of 19 percent for individual business income. Poland also has set up a partially privatized system for old-age pensions.

* The tax regimes in Malta and Cyprus are so attractive that they were blacklisted as part of the Organization for Economic Cooperation and Development's anti-tax competition crusade.

* The three Baltic nations -- Estonia, Lithuania, and Latvia -- all have flat tax systems. These nations also have pro-growth tax regimes for business income. Estonia, for instance, has eliminated the corporate income tax for reinvested profits.

These free-market tax reforms -- not the possibility of handouts and migration -- are the real reason why enlargement is a "threat" to Western Europe. Simply stated, market-oriented East European countries are going to impose enormous competitive pressure on high-tax welfare states. Beginning on May 1, walls come tumbling down and companies can shift economic activity to countries like Poland, Slovakia, and Estonia. Why pay the enormous costs of producing in France and Germany, after all, when you can move a few hundred miles, dramatically reduce the burden of government, and still be inside the EU customs union?

Indeed, the competitive pressure already is having an effect. Germany recently lowered its corporate tax rate from 40 percent to 25 percent and is in the process of dropping personal income tax rates. Italy and Finland have made some modest reductions in corporate tax rates. Austria just announced that its corporate tax rate will be cut from 34 percent to 25 percent, and Portugal and Greece have stated that corporate tax rates will be reduced as well.


But there also can be little doubt that East Europe's accession countries make it even more difficult for nations like France and Germany to prop up their costly welfare states. This is why high-tax nations in the EU favor tax harmonization. Fortunately, repeated efforts to harmonize corporate tax rates have been unsuccessful, and attempts to create a tax cartel will be even more difficult after May 1 since East Europe's low-tax countries will have a seat at the table.

EU expansion traditionally has aroused concern among advocates of economic liberalization, and there can be no doubt that over-regulation from Brussels remains a serious problem. But now it is possible to look at the glass as being half full. If the accession nations continue to make market-based reforms, all of Europe may wind up engaging in a "race to the top," competing to implement the best economic policy

posted by Miguel Noronha 4:55 da tarde

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"A society that does not recognize that each individual has values of his own which he is entitled to follow can have no respect for the dignity of the individual and cannot really know freedom."

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