(From Reuters: “France’s students and trade unions prepared a victory parade [today] to mark the demise of a hated youth jobs law, with politicians and analysts split over whether the hope of labour market reform was dead too…. ‘Alas, the hope for reform has been buried with them,’ [the business daily La Tribune] wrote. ‘No important reform can be undertaken in the 12 months ahead of us until the 2007 presidential election. And nothing says it will be easier after that.'”) Posted on on April 6, 2006: Ireland, Hungary and Slovakia are doing something wrong. They enjoy healthy economic growth rates, attract new businesses, and — gasp — have low corporate tax rates. Today’s Wall Street Journal reports that several European Union nations are “moving ahead with the long-taboo subject of creating common rules for corporate taxes, despite objections from low-tax nations such as Ireland and Slovakia…. Ireland and Slovakia have benefited from lower tax rates than their neighbors.” The current corporate tax rate in Germany is 38.9 percent; France, 35; Italy, 33; U.K. 30; Slovakia, 19; Hungary, 16; and Ireland 12.5. An original EU member state, Ireland has been an economic juggernaut compared to its larger neighbors. This study by two Swedish academics singled out Ireland as one of the few bright spots in the last decade in an otherwise stagnant European economic landscape (former East Bloc nations were not included in their analysis). Fredrik Bergstrom and Robert Gidehag observe:
Perhaps EU leaders should learn from Ireland and the nations of Central Europe (see Business Week‘s “Rise Of A Powerhouse“) rather than seeking to penalize them for understanding how to compete in a global economy. Unfortunately, it’s a lesson many French “students” have yet to grasp as they protest proposed changes in the nation’s job-stifling labor laws.
