Monday, January 02, 2006

Responsible Tax Policy

German finance minister Peer Steinbruck has urged new EU member states to raise their taxes and ensure "fair tax competition" among the 25 members of the bloc.Tax cuts in many of the new EU member countries have "nothing to do with fair tax competition and place a burden on German jobs", the minister said in an interview with German daily Die Welt.

So wait a minute!  Other EU nations are starting to catch on that high tax rates hamper business, slow the economy and are generally just a bad idea and Germany’s response?  You aren’t being fair to us!!!  

I didn’t realize that that EU was supposed to be a vehicle for German protectionism, of course the correct response is for Germany to start competing for those jobs fair and square by providing an economy that is capable of competing with their European bretheren.

The problem must be seriously discussed and a solution found, he added. The German minister said the tax cuts in some EU countries were partly financed by Berlin’s contribution to the EU's coffers.

That is a fair concern, I have the same concern about the US’s contributions to the increasingly anti-American UN.  But again the proper response is not forcing other nations to match German preferences, it is to make EU funding equitable.  Granting new EU members a reprieve on membership dues is probably good politics, but once their economies take off the subsidies should end.

Germany’s new coalition government had planned to raise VAT to 19 percent in 2007 in a bid to narrow the country’s budget deficit which is exceeding the levels set by euro zone criteria.

Why is  spending control such a foreign concept to politicians?  Even the “fiscally responsible” Republicans here in the US seem to have forgotten that it exists.

Slovakia has imposed a 19 percent flat tax in order to attract business and create more jobs.

Now that’s an idea that I hope catches on, unfortunately with liberal Germans threatening to extort nations into abandoning such measures, I’m not optimistic.

HatTip: EURota

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