Using the tax/benefits system to stimulate growth A seven-member consortium took a novel approach to studying European tax/benefit systems as related to EU growth. The tools developed and knowledge generated have the potential to guide relevant policymaking for needed reforms. Climate Change and Environment © Thinkstock The European Union's ambitious economic goals call for social cohesion and sustainable development with regard to the environment. Taxes and benefits are key economic policy instruments that EU Member States will have to use to take us closer to realising these goals. The 'Tax/benefit systems and growth potential of the EU' (Taxben) project set out to enhance knowledge relative to the functioning and reform needs of the EU's tax/benefit systems. The project used EU funding to investigate problems linked with the region's faltering potential growth and the role of tax/benefit systems in this process. The ultimate aim was to provide policy options that can help improve the EU's potential growth and attainment of high employment levels. The Taxben consortium used many novel approaches to build new tools for analysing the direct and indirect effects of taxation. The aim was to be able to produce quantifiable policy options capable of being adapted to various political constraints. New applications of existing large-scale multi-country models were carried out, and theoretical approaches to economic policies under the single currency were considered. The former assisted in evaluating the impact of tax policies, while the latter took a global approach to policymaking. Project partners also used large international datasets to study the relationships between key economic target variables and tax/benefit, and other fiscal policies and labour market indicators. Twenty-four working papers were produced, with other activities realising the organisation of five seminars and a final conference. Overall, Taxben efforts generated numerous research insights into behaviour related to tax/benefit systems and resulted in highlighting knowledge vital to the policymaking process as well as reforms related to EU tax/benefit policies. Advances were related to the areas of employment, tax competition, productivity, the macroeconomics of tax systems and energy taxation.
