1. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be TAXBEN Tax/benefit systems and growth potential of the EU SIXTH FRAMEWORK PROGRAMME PRIORITY [8 Topic 3.1. Task 4]

2. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Partners Centre for European Policy Studies, CEPS, Belgium The Research Institute of the Finnish Economy, ETLA, Finland Centre d Etudes Prospectives et d Information Internationales, CEPII, France Centre d Etudes Prospectives d Economie Mathématique, CEPREMAP, France Netherlands Bureau for Economic Policy Analysis, CPB, The Netherlands Center for Policy Studies, PRAXIS, Estonia

3. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Objectives The link between tax/benefit systems and employment in the EU The EU tax systems under tax competition and enlargement The growth potential of the EU and its relation to tax/benefit systems The macroeconomic role of tax systems in promoting reforms in tax systems in the EU under the single monetary policy Attainment of sustainable growth in the EU with a high quality of the environment, and the role of green taxes and emissions trading in the energy sector.

4. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be WP1: Tax/benefit systems and EU employment WP2: Tax competition in an enlarged EU WP3: Productivity growth WP4: Tax policies and macroeconomic stability in EMU WP5: Green taxes and sustainable growth (pilot study) WP6: Final conclusions, final conference Project management

5. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Main tasks I To consider tax/benefit systems and the functioning of EU labour markets using –numerical general equilibrium model of the labour market making a distinction between workers of various skill levels –Numerical general equilibrium model to analyse the basic difference between the EU and US labour markets in terms of investment in firm-specific skills in the EU and general human capital in the US First extension: we take into account the transition between short- run and long-run unemployment Second extension: we introduce different offer arrival rates in employment, short-run and long-run unemployment.

6. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Main tasks II To build a gravity model of foreign direct investment (FDI) determination, using as key explanatory variables the unit labour cost and indicators of corporate taxation –aim: quantitative insights on the scope for tax competition and tax harmonisation CGE (Computable General Equilibrium) model for the EU to describe the allocation of international capital flows –aim: to explore the economic implications of (i) tax harmonisation in EU corporate income taxes (ii) tax reform in European Union countries (unilateral and jointly)

7. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Main tasks III Examination of the quantitative impact of reforms of tax/benefit systems, via reduced unemployment and enhanced TFP (total factor productivity) growth Role of labour institutions of the accession countries with respect to their convergence to the EU

8. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Main tasks IV How taxes affect both supply and demand To examine the working of EMU against the background of reforming EU tax policies To describe the spillovers of fiscal policies within EMU

9. CEPS, 1 Place du Congrès, 1000 Brussels, +32 2 229 3911, www.ceps.be Main tasks V To consider current and optimal green taxes for reaching a sustainable use of natural resources within the EU What are the costs of emissions reductions with a European system of tradable permits when the existing energy taxes are explicitly taken into account? What are the potential benefits, if the system of emissions trading were to be extended to more sectors? How to reconcile Kyoto and Lisbon?