23/03/2005 1:05:30 pm
Hope Comes From the East! I have just arrived in a sunny and warm Paris, where I will give a speech tonight at the Assemblée Nationale for a network hosted by former French Finance Minister Alain Madelin. Yesterday, I debated with Mark Leonard, author of "Why Europe will run the 21st century" in Brussels. The topic was whether or not Europe is doomed (I said no, but argued that the European Social Model is) and it turned out to be an interesting and intense debate. Apparently the debate was recorded and there will be a full transcript at the Stockholm Network web page at some time. I focused my introduction on why radical reform is needed, what we should do, and pointed out especially that hope comes from the Eastern and Central Europe:

"To a large extent, these countries have a limited state and a big society. In Hungary, for example, in 1992, the state accounted for 70 % of the economy. Now, it is 14 %. They have limited regulations for companies and labour. And one main feature is low taxes, especially increasingly more popular flat tax ? in nine countries. Everyone pays the same percentage in tax regardless of income ? simple, fair and work always pays off.

Of course competition from these countries is felt in the West. Austria lowered their corporate tax from 34 to 25 %. Germany will decrease theirs from 25 % to 19 %. And, by the way, a high tax level is no guarantee that you get high revenues. Slovakia has 2,3 % of GDP in corporate tax revenues from a 19 % tax level. A large Western European country gets 0,7 % of GDP from a corporate tax level twice as high."

Read the entire introduction here - >