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Is there any solution for the eurozone’s problems?

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Is there any solution for the eurozone’s problems?

Pawel Rogalinski, Komisja Europejska, Parlament Europejski, Bruksela, www.przegladdziennikarski.pl, blog dziennikarski, Rue Wiertz 60The crisis reminds us of one of the fundamental problems the European Union faces – poor quality of states’ management. A balanced budget should be one of the most rudimentary principles of ruling the country. In other words, politicians should not normally spend more money than their countries have.

 

In order to balance income and expenditure, national governments usually implement acts increasing rates and taxes or introducing new ones. Yet, the direction of fixing state budgets seems to be wrong. Although increasing VAT rate in the short term will probably rise tax revenues, in the long term it may weaken consumer demand.

 

Financial transaction tax in one or several states should also be discarded because of negative historical experiences. In many cases, the introduction of such charges resulted in decreasing the volume of these transactions or moving them to another country where this type of tax did not apply.

 

Economists say there are several right steps that can be taken in the case of economical crisis. One of them may be reducing unnecessary budget spending on public administration. Cutting down the number of people employed in the public service would bring huge savings. Unfortunately, politicians are often reluctant to take such an action.

 

Some other solution would be tightening tax systems, as they are usually not only too complex, but also full of loopholes. However, financial reforms often meet with electorate dissatisfaction, which can freeze any brave steps.

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