Tax Policy and Economic Growth: Does It Really Matter?

Filiep Loosveldt participated to the parliamentary event related to tax policy and economic growth on 25 September in the European Parliament. Professor Riccardo Puglisi commented the results of his study : “Tax Policy and Economic Growth: Does It Really Matter?” (here).

He challenges the “OECD view” according to which in the long run the tax burden is negatively related with economic growth, while a shift from direct to indirect taxes is associated with higher economic growth. Interestingly, in the short run he finds a negative and significant correlation between a shift from income taxes to recurrent taxes on immovable property and economic growth, which runs contrary to the standard “OECD view” and the country specific recommendations by the European Commission itself in the context of the European Semester.

Lara Comi (MEP, EPP) and Markus Ferber (MEP, EPP) stressed the need for evidence based policy : the policy recommendations of the European Commission need to be backed by empirical evidence. To be continued …