While some European economists and finance ministers are all about the optimism and are acting quite pleased with the eurozone’s “achievement” of barely-there but finally above-zero economic growth numbers, others are thinking a little more cautiously about whether or not member states have really, truly created long-term growth-friendly policies that can help with lowering outsized unemployment rates, encouraging sluggish consumer spending, and etcetera. Hint: Very probably not, via the WSJ:
The Centre for Economic Policy Research, a network of more than 700 economists primarily based in European universities, dates periods of expansion and recession. Its Euro Area Business Cycle Dating Committee provides judgments on the currency area’s entry into and emergence from recession that is independent of policy makers in much the same way as the National Bureau of Economic Research’s Business Cycle Dating Committee in the U.S. …
“While it is possible that the recession ended, neither the length nor the strength of the recovery is sufficient, as of 9 October 2013, to declare that the euro area has come out of recession,” the committee said.
The committee said that for it to conclude that the euro zone had emerged from recession, it would have to see “evidence of sustained growth, corroborated by a range of indicators.”
Europe still has a lot of work to do before they substantively improve their fortunes, and France, in particular, is a heartbeat away from claiming the title of the world’s largest government-spending-to-GDP ratio (a soon-to-be 57 percent). Despite the recommendations of economists and government officials, Socialist President Francois Hollande is charging forward with adding still more taxes to the country’s already historic burden in order to try and meet his deficit-reduction targets, including a temporary “supertax” of 75 percent on incomes over a million euros. I mentioned the other day that French soccer teams were ready to revolt in the event that the government follows through with the tax, but Hollande is refusing to back off:
France’s president, François Hollande, has said French football clubs will not be exempt from paying a supertax on high salaries in response to their decision to strike next month in protest.
Football clubs are staging their first strike since 1972 over the tax, which employers must pay on salaries exceeding €1m (£854m). Top clubs complain it will add up to €20m to their tax bill.
Hollande said he had accepted a request to meet the head of France’s football federation, Noël le Graët, over the 75% supertax, but saw no need to create an exception.
“When the tax law is voted, the law will be the same for all companies regardless of what they are,” Hollande told a news conference in Brussels. The bill is due in coming weeks to be passed by parliament. “This does not stop us from having a dialogue on the difficulties facing professional clubs, but everyone needs to be aware of the rules.”
And that is far from the only new tax the French government is cooking up.
French parliamentarians on Thursday (24 October) voted for a new tax on energy drinks, such as Red Bull.
The vote is the second attempt to impose a charge on the products after the first was overturned in court. Members of the parliament voted to approve a tax of one euro per litre from next year on drinks that contain at least 0.22 grammes of caffeine per litre, or 0.3 grammes of taurine. …
The new tax aims at promoting health by limiting the consumption of such drinks, but does not affect ordinary coffee.
Aaaaaand there’s more:
The French government has also anounced that it will beef up the exit tax, a tax first implemented by Sarkozy in 2012 intended to slow the pace of people leaving the country for tax reasons. The exit penalty taxes capital gains at the rate of 19 percent and adds a 15.5 percent payroll-tax-like penalty. The tax isn’t paid as taxpayers exit the country, but they have to pay it if they sell their assets within eight years after their exit. Hollande that limitation to be expanded up to 15 years after the taxpayers leave the country.
Supertaxes, sin taxes, exit taxes… why do I find myself skeptical that any of this will help bring about the economic growth they’re looking for?