Fiscal Policy, Taxes and Their Impact on Economic Development

Abstract

The paper presents comparisons of fiscal policy - tax amongst different countries. Many developed countries and developing countries have used fiscal policy Tax-oriented to develop the economy. Taxes transition in the Western Balkan countries is oriented reforms modeled according to three main priorities: 1- Simplification of the tax system, 2- Establish transparency and clear procedures and 3- Safety that the legislation has being implemented fairly. Increasing taxes is intended to increase budget revenues can often be self-defeating and that public authorities should limit contributions to social insurance funds in order to stimulate job creation and development of small and medium. At the same time, some transition countries have embraced fiscal policy as a potential tool for attracting foreign direct investments in the country. Taxes (fiscal policy) have their importance to the need for improved the projected benefits of the field in stimulating and building profitable economic sectors. States through the tax impact on attracting foreign investment and increase employment of the population as is the case of Slovakia in attracting Hyundai to invest offering low taxes and the tax holiday period. Tax legislation is such an area. A second perspective about the ability of governments is to use taxes in order to encourage more business. Some new countries acceding EU taxes are reduced to a level such that the older members are talking about "unfair competition". The case of Slovakia has established a single quote for income tax (19%) mimicking the pattern in which the Baltic countries have experimented for years. Corporate taxes are also lower in countries such as Poland and Hungary. Another example Austria, has decided to develop similar policies in order to stem a possible removal of the capital. Although national fiscal policies represent a wide range of variation within the EU. European Union and competitive area best in the world in terms of knowledge-based economy reinforces this fear (capital flight). It may be only a matter of time before the European Commission in Brussels to deal with the definition of "rules" intended to administer tax competition within the EU.

DOI: 10.5901/ajis.2013.v2n8p463