CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

TAXBEN

Tax/benefit systems and growth potential of the EU SIXTH FRAMEWORK PROGRAMME

PRIORITY [8 Topic 3.1. Task 4]

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Partners• Centre for European Policy Studies, CEPS, Belgium• The Research Institute of the Finnish Economy, ETLA,

Finland• Centre d’ Etudes Prospectives et d’ Information

Internationales, CEPII, France • Centre d’ Etudes Prospectives d’ Economie

Mathématique, CEPREMAP, France• Netherlands Bureau for Economic Policy Analysis, CPB,

The Netherlands• Center for Policy Studies, PRAXIS, Estonia

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Objectives• The link between tax/benefit systems and employment

in the EU • The EU tax systems under tax competition and

enlargement• The growth potential of the EU and its relation to

tax/benefit systems• The macroeconomic role of tax systems in promoting

reforms in tax systems in the EU under the single monetary policy

• Attainment of sustainable growth in the EU with a high quality of the environment, and the role of green taxes and emissions trading in the energy sector.

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

WP1: Tax/benefit systems and EU employment

WP2: Tax competition in an enlarged EU

WP3: Productivity growthWP4: Tax policies and

macroeconomic stability in EMU

WP5: Green taxes and sustainable growth (pilot

study)

WP6: Final conclusions, final conference Project management

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Main tasks I• To consider tax/benefit systems and the functioning of

EU labour markets using – numerical general equilibrium model of the labour market

making a distinction between workers of various skill levels – Numerical general equilibrium model to analyse the basic

difference between the EU and US labour markets in terms of investment in firm-specific skills in the EU and general human capital in the US

• First extension: we take into account the transition between short-run and long-run unemployment

• Second extension: we introduce different offer arrival rates in employment, short-run and long-run unemployment.

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Main tasks II

• To build a gravity model of foreign direct investment (FDI) determination, using as key explanatory variables the unit labour cost and indicators of corporate taxation– aim: quantitative insights on the scope for tax competition and

tax harmonisation • CGE (Computable General Equilibrium) model for the

EU to describe the allocation of international capital flows – aim: to explore the economic implications of

• (i) tax harmonisation in EU corporate income taxes • (ii) tax reform in European Union countries (unilateral and jointly)

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Main tasks III

Examination of the quantitative impact of reforms of tax/benefit systems, via reduced unemployment and enhanced TFP (total factor productivity) growth

• Role of labour institutions of the accession countries with respect to their convergence to the EU

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Main tasks IV

• How taxes affect both supply and demand• To examine the working of EMU against

the background of reforming EU tax policies

• To describe the spillovers of fiscal policies within EMU

CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be

Main tasks V• To consider current and optimal green taxes for reaching

a sustainable use of natural resources within the EU • What are the costs of emissions reductions with a

European system of tradable permits when the existing energy taxes are explicitly taken into account?

• What are the potential benefits, if the system of emissions trading were to be extended to more sectors?

• How to reconcile Kyoto and Lisbon?