THE ABSENCE OF A COMMON fiscal policy IN THE EUROPEAN UNION
I would like to illustrate you how the absence of a central fiscal system affects the economic activity in the Euro zone and how the pooling of some fiscal instruments over which national governments have no or little control is an optimum strategy against economic and fiscal shock:
Let me give you first an essential background information about the fiscal policy: according to the fiscal policy the balance between the use of government spending and taxation revenue has an impact on the economic activity of a country; How? For example if there is an increase in government spending and a fall in taxation revenue a budget deficit is registered leading as well to a higher percentage of global debt with the consequence of creating instability over the all economic growth of the country.
Now in the European Union each Member State follow the fiscal policy of its national government, but at the same time each one of them have to respect the provisions of the stability growth pact in maintaining the budget balance and this leads to conflicts among the States, because how will each country maintain the same budget balances if there is no fiscal consolidation among them?
Some countries will register a high budget deficit and public debt whether others will have low public debt and budget surplus according to their economic capacity and structure and according to their taxation system which is also meeting their national requirements.
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Now let’s see this situation of imbalance between the EU members through an example: Greece, as Jelena illustrate you before has exceeded the Eu ceiling every year since the country adopted Euro, registering the highest percentage of budget deficit and public debt due to internal economic problems of an inefficient tax system where tax evasion is widespread feeding the Greek attitude that only the stupid pay taxes. So that in Greece tax revenue is among the lowest in the European Union whether the public expenditure is among the highest. Making itself the weakest link in the members fiscal policy chain.
HOW THIS SITUATION HAS BEEN FACED AT THE GREECE LEVEL? INEFFICIENTLY:
The whole System in Greece is still decentralized until recently facing serious difficulties in starting to implement a total reform of the tax system regaining citizens’ trust. So the Government adopted a series of escamotage choosing the easiest, but at the same time short lasting and inefficient way out of the crisis by asking an unconditional support to the European Union and even by asking to external countries like China and even to the rich Sheik of Abu Dhabi to invest their money in the countries.
HOW THE SITUATION IS BEING FACED AT THE EU LEVEL? CONDITIONALITY AND SURVEILLIANCE:
The prospect that a member of the euro currency bloc might default on its debts and the danger that an escalating Greek crisis would spread to Spain, Portugal and even Italy moved the EU countries leaders to form a rescue plan where finally strict measures will be taken against Greece.
Greece will receive the support of Germany, France and others, but only at the condition of the immediate implementation of a radical reform on its tax system starting from increasing tax revenues, introducing new taxes on items such as luxury goods and fuel and making the State’s financial information databases more transparent about taxpayers declarations (example the case of doctors ,lawyers and so on declaring a pittance but living in a multimillion-dollar apartment).
Our current tax system is complex, costly, and unfair. Surely, America can do better for our children than redistribution and regulation. Our nation is over four trillion dollars in debt. It is time to act instead of letting lawyers and politicians play with our money. A flat tax plan is a simple solution to remedy the stagnant apathy our nation has been so accustomed to for the last seventy ...
THE BENEFITS OF THE COMMON FISCAL POLICY MOVING TOWARDS A GENERAL TAXATION POLICY
So, as we have seen leaving the responsibility of the economic stability of a country at its national level within a uniform community system like EU creates a great instability that needs urgently to be fought by the Union bringing forward more decisive firm initiatives for the coordination in the fiscal and taxation system of each country creating a leading framework for each one to be followed.