Chartered Accountants Ireland published its first public commentary on the European Community approach to economic and fiscal policy in November 2007. Since then, the Institute has published a series of papers by various authors and with differing perspectives to contribute generally to the thinking and debate on European issues. The attached document published today is the latest in this series.
The purpose of this paper is to encourage debate on whether such decisions on how to balance tax and expenditure are best made at a central level in the EU or in a decentralised manner. Its author, Liam Lynch who is a Council Member of our Institute, argues that:
- If tax rates increase too much, economic activity contracts leading to reduced tax receipts and bigger deficits.
- If expenditure is limited too severely then services become limited too severely.
- In either case the social contract is broken and political instability is the outcome.
It is increasingly evident that what may be a correct balance for one country is not necessarily correct for another. This paper therefore expresses a definite preference for a decentralised approach with the concept of subsidiarity at its heart.
ENDS
Reference: Brian Keegan, Director of Taxation, Chartered Accountants Ireland T: 01-637 7347 M: 087 2347329