Tax, sovereignty and the EU

[music] Hello, and welcome to the Sound of Economics, the podcast from Brugel, the Brussels-based economic think tank. I'm your host Rebecca Christy. I am joined today by two of my fantastic Brugel colleagues, Pascal Santamont, and rule Dom. And we are going to be talking about tax, specifically the world of international tax agreements, which is fraught with drama and intrigue, and also the battle to pay for all of the things that Europe needs at the European and national level, and how taxes play a role in that. Pascal, tell us about the international setup. We had this global tax deal that you were very much part of in your prior work at the organization for economic, cooperation, and development. Then it ran into some speed bumps internationally, now at least on part of that we're moving forward. How are we doing? Hello, everybody, first, and maybe we've lost half of the people when you said tax. But it's exciting, so please bear with us. What has happened is that, if we do a fast forward from a century ago, we had an international tax system based on bilateral relationship following the global financial crisis in 2008. There is a tax reform, an international tax reform, which came up with tax cooperation, countries talking to each other, and ultimately adopting a global minimum tax to put an end to aggressive tax avoidance, tax evasion, and these global minimum tax, which is the outcome of 15 years of negotiation, provided that multinational companies, wherever they are in the world, should be taxed at a minimum of 15 percent effective, right? And this deal was landed in October 2021. It was that one of the top priorities of President Biden. That's what. President Trump was not in agreement that American companies would be subject to 15 percent minimum tax in other countries than the U.S. In case they would have profits located in Cayman or other low tax jurisdictions. And President Trump, on his first day in office said, "I withdraw from the OECD deal." By the way, President Biden failed to get it approved by the U.S. The U.S. was not implementing the minimum tax, but as a result, other countries may have taxed under tax profit of American companies, let's say, in Cayman. So an American company is having $1 billion of profit in Cayman tax, that's zero because there is no tax there, would have had a 150 million tax in Europe or elsewhere to compensate that. So Trump said, "You cannot do that." And if you do that, I use weapons against you, in that case, it was a threat of retaliation tax. And then the G7 started negotiating a deal by which they said, "We agree that the U.S., which, by the way, under Trump won, was the first country to introduce a minimum tax, which is called guilty." That's a funny name provided by the Republicans at that time. Guilty is a bit less, it's 12.6% instead of 15, and it's computed on a global average instead of a national average. But Trump said, "We have that, so you don't tax our American companies." And the Europeans, the Canadians, the UK, the Japanese, the Korean, the other 40 countries which implemented the minimum tax said, "Okay, you're stronger than we are. We agree with that, but we want to insist that American companies will not be protected from the minimum tax in low tax countries," which have decided to take the 15%, because you have a complex mechanism with three tiers, see that the U.S. taking it or the Europeans or in the between, if Cayman decides to take the 15%, the U.S. has agreed that Cayman could do it. And we have currently many low tax countries which are taking the 15%, cutting short the long story. The U.S. has obtained from their partners some form of sheltering of their American companies from the minimum tax. I said some because it's not complete and we'll have to see on the way forward what's the implication on the minimum tax surviving or not. Thanks for that overview. The key that I take away is that surviving is still in play because there have been several moments over the years when this thing seemed like it was done for. Pascal, is that overall a global win that we're still here? The fact that you have 147 countries agreeing such a deal after a year of trouble, I think we can use that understatement to describe the geopolitical environment is a win. I mean, you know, tax has been the success story of the G20 since 2008 and of bank secrecy or the automatic exchange of information, the BEPS work, people may remember Bay's erosion and profite shifting, a series of 15 measures approved, multilateral instruments, hard low instruments approved, the multilateral convention, mutual assistance, a multilateral instrument to change bilateral treaties. All these are concrete changes which have happened and the global minimum tax which was kind of the end of the road there and seeing and folding would have meant that the whole infrastructure of tax cooperation which had been built would collapse. And here, again, one year after Trump started his presidency, you have all the countries of the inclusive framework, 147, including China, agreeing a set of rules which are asymmetrical. I mean, the U.S. gets a better deal than the others even though the deal may be open to the others, if the photoshoot of the U.S. put in place something like guilty and so. So is it success? It's a bitter success, I would say, bitter because it's asymmetrical, it gives a competitive advantage to American companies, but they always had something like that in the past because the power of the U.S., the power game, but it's success to the extent that you bring all the countries together or you keep all the countries together. And in two days world, having such a deal is not bad, I'd must say. So bitter success. And we're still talking and we'll come back later on this podcast to the other half of the OECD debate which is still at an earlier stage of the process. Pascal, you mentioned a lot of the information sharing advances of the past years and the attempts to stamp out tax fraud whenever governments need to raise money. The first thing they say is, well, instead of new taxes, we're just going to make sure everyone pays the taxes they already owe. So we're going to share information, we're going to get rid of fraud and that will bring in some money. Great. At a certain point, however, you have to look at your actual taxes, not just the gap between what your taxes are and who's paying them. Will you and Pascal did a report on what Europe can do to make its tax environment work better? Would you like to tell us about that work? Sure, I'm very happy that we're talking about tax. We don't do that enough. One thing I think is striking is that we're not talking about tax given the amount of attention we give to the spending side and across Europe, we keep agreeing on new common priorities from climate to security to defense to the competitiveness, but we do so without really talking about how we will align our financing architecture, the revenue side to support those common EU priorities. So I guess to me, there's a real question about whether our existing financing framework is designed to support those common EU priorities. And that brings me, at least to the tax system, are we taxing our tax levels where we want them to be? How are we raising that revenue and what is structure like? Now, if you look at those different elements, I think if you start with tax levels, then what you see across Europe is that internationally they stand out. We tax on average by 10 percentage points of GDP more than non-EU OECD countries. Of course, this reflects many things, different preferences for social spending, for welfare states and what not. So I guess the more interesting question is about this tax mix that is the structure of taxation. How is labor tax, labor taxes? How is that compared to consumption taxes and capital taxes? Now there, I think what is striking is that there's actually been very little change over the past couple of decades, despite emphasis on increasing things like labor supply, increasing competitiveness, labor taxation, for example, still accounts for much more or for about half of total revenues, whereas capital tax revenue is, represents a much smaller share. For example, despite sort of our emphasis on our climate ambitions, environmental tax revenue as a percentage of GDP is actually decreasing. And this pattern, and I'll come to your question, this pattern is also visible in sort of the EU-eval tax policy advice that's coming out of the country's specific recommendations. And indeed, let's go on myself to get with the help of our colleague Constanza, Konstanza M. Matturana Grepe. We looked at these trends across time, and we see that indeed tax policy recommendations have also shifted away from labor taxation and consumption tax to capital taxation and tax administration. And this is consistent with sort of evolving EU priorities if you want EU policy objectives. Now, the striking thing here is that implementation hasn't followed. So despite these recommendations, we see that only 14% of those are actually implemented. Now, what this tells you is that, or what this tells me at least, is that Europe keeps asking tax systems to do much more, focusing on supporting roads, supporting fairness, supporting the green transition, but fundamentally, tax systems are not changing in the same way. They are actually fundamentally staying quite the same as they were, let's say, 20 years ago. The two of you have recently embarked on a huge new project for approval and for Europe in general. Pascal, tell us about the tax observatory. The EU tax observatory is an initiative that the EU Commission launched years ago, and which focused on what they call the tax gap, which was kind of the work that the OECD carried out for years on fixing the gap. So putting an end to back secrecy, organizing tax cooperation, or fighting the tax avoidance of multinational companies, and Gabriel Ziegman, with the Paris School of Economics, was leading the EU tax observatory, and he's still leading, because he won the bid regarding this part. But the Commission decided to do a new branch of the EU tax observatory, and they asked consortia to apply for that. So, bring it to the lead of a consortium involving many prime universities in Europe from Vienna University, also Oxford University, which is very good at corporate income tax, Amsterdam, Copenhagen, Rotterdam, and a few others, Madrid. And this is about tax competitiveness, it's a bit what Hull has just indicated. How do you reconcile, which I believe is the main equation of our times that we need to solve? How do you reconcile, reducing inequalities, which are undermining the social contract, and we can see the rise of populism or pre-revolutionary situations in some countries, because of this rise of inequality. So, how do you address that while protecting the social systems, and first to growth? And so far, I believe economists have kind of failed at that, because they have not been able to bring these together. So, either you have the simplified approach, oh, if you want growth, reduce capital taxation, especially in an environment where you have tax competition, or you have the left-hand side, I would say, saying, oh, we should tax capital, we should tax wealth, and all that. How can we get smarter at that, and provide the European countries, more than the commission because tax policy is primarily domestic, but we cannot do smart domestic policies if we don't take the European dimension. And it's missing, and this tax competitiveness hit with this new branch of the EU tax observatory that we will be leading at burger is extremely exciting. It's a three-year plan, and we intend not only to have articles on these questions, including grinning the economy. You may remember climate change, I mean, for the past year, we're kind of forgetting about that, because of the influence of the US, but how do you grin the economy while fostering growth? How do you reduce inequalities while fostering growth? How do you improve the productivity in Europe while ensuring the social network that we have, and this is what we will be working, and we're very excited, we intend to launch it sometime in March, and the goal is to make Europe not only great again, obviously, but also the place where you will have a debate on tax policy. And speaking of debate, there is a second half of the tax observatory. Can you just briefly tell listeners what's happening on the other side of this giant project? So the other side is the tax gap, which I mentioned, led by Gabriel Zykman, who is well known to promote a global minimum tax on wealth, and Gabriel keeps this work on track. They're organizing soon a conference on taking stock of the impact of automatic exchange of information, which has been quite massive, and we'll be working with these two legs or two branches of the tax observatory, but we are extremely excited again to trigger a tax debate, which will go beyond borders, it's not only the pure domestic tax debate with the good economic dimension to inform the countries, to inform public, the people of the countries, and to make sure that it resonates in Europe and beyond Europe. Thanks for that. We will be looking forward to these developments, and this news can follow along on our website Brugel.org, we'll be posting links and announcing things as they come together. In the next part of our podcast, I'd like to bring our lens back to the European Union a bit. We are entering the next seven-year budget cycle. We'll spend the next two years debating how the EU is going to fund itself for seven years, which involves looking at national contributions and also looking at what they call the own resources, the taxes and charges, and guarantees that make up the money side of the EU spending. Brugel, how do you see this debate emerging? It's one of the key debates, I think, going forward over the next couple of months. So you're right, over the summer, the Commission put out its proposal for the next MFF for the next multi-final, multi-annual financial framework, and that includes a couple of proposals on new own resources. Quickly coming over them, you have one on the EU Emissions Trading System, where it's proposed that, I think, 30% of revenues will now be allocated to the European budget. You have a proposal on the carbon border adjustment mechanism, where about 75% of revenues will be allocated to the EU budget. There's a proposal there on non-collected e-waste, so that's a statistical resource. There's also a proposal on tobacco excise, which a part will come or is proposed to flow to the European budget. And then there's also a levy on annual turnover for the largest companies that was proposed as part of the new own resources. Now, looking at those proposals for new own resources, I think there's a couple of points to be made before we delve into the specifics, and that's one, this is such thing as free money. I think we've debated this quite a number of occasions, but all this money ultimately comes from European citizens, whether that is through national budgets, through levies, through taxes on corporates or individuals, but also, and this is perhaps more important than often overlooked, is that as long as we don't increase the budgetary ceiling on how much we can spend at the European level, all that the introduction of new own resources does is basically lower the GNI contributions that countries have to make. So in that sense, new own resources, rather than bringing in extra money, are merely changing the distribution of efforts across countries. And that's, I think, an important thing to note before we delve into this discussion. So to me, it's not about can we invent so much new tax? I think there's probably maybe even too easy even in new tax, if you look at all the proposals out there, but it's more about, and Pascal referred to this as well, can we design a financing architecture that supports European policy priorities and European public goods? And I think there, it's important that we focus on the design, but that we're also careful with, for example, some of the proposals that may look rather simple, but may actually turn out to be economically rather messy. And I'm thinking specifically of, for example, the core levy. So that's the turnover-based levy on companies of a certain size, which was framed as benefit, or these companies were framed as benefiting from the single market. I think that this could be economically distortionary, and this may have unintended consequences. And over the summer, we published an analysis where we argued that perhaps this proposal should be withdrawn, in part, because it may be perceived as unfair, because companies with different abilities to pay may are actually impacted in the same way. Now does that mean that there is no space for new own resources? I don't think so. There is a chance here to introduce well-designed new own resources to the extent that they support common EU priorities. We floated one idea, which was a defense shortfall levy, where you would link a new own resource. You revenue to shortfall on something that we consider a EU priority or our public goods, in this case, spending on defense, where you would sort of use a defense-pending benchmark as the indicator. Now this past dual advantage that it doesn't only link your revenue system with EU policy priorities, but may also reduce this logic of the justritour or the net balances by shifting away the conversation about how much our is country actually paying to a conversation about how is country performing with respect to some sort of a policy priority. So I think here, for me, the message would be to focus less on maybe on the level, but more on the structure of the revenue side. Thanks for that. We've done a couple of podcasts with your co-author on that budget blueprint, Joe Darvish, where he did single out the corporate levy as something that might be a proposal worth rethinking. And we will link to those in the short notes as well as the blueprint itself, so interested listeners in the MFF, particularly if you're interested in the spending side, you should go check those out. Moving back to the money coming in, you mentioned that we're looking at sort of the division between revenues coming in and guarantees that are calculated based on gross national income. And also on debt now, we're looking at the EU servicing and deciding whether to extend or reduce the outstanding joint debt that it has to pay for the pandemic recovery and next generation EU program, some of the aid to Ukraine and other things like that. Pascal, can you give us a little bit of a historical perspective? It was so revolutionary when NGEU was launched during the pandemic to start borrowing. And at the time, one of the ways leaders made peace with it was by saying, "We're going to bring in new own resources," and they mentioned the carbon-border adjustment mechanism, and they also mentioned a digital service's levy of some kind. How do you think that declaration looks in hindsight and where do we stand on the own resources that they promised to bring in? Yes, indeed. That was quite revolutionary, right? The European Union going to the markets issuing bonds and having its own debt. With the question now, being raised again with Ukraine as we all know, and also would you expand next generation EU. And the agreement was based on the fact that you would indeed have new own resources. Where do we stand on that? Well, there is some progress. I mean, as the rule has explained, that's extremely important to understand. When you talk about own resources in the European Union, you're talking about the budget. I mean, the budget is fed with own resources, and the GNI contribution is on own resource. So there is something wrong with the words, and that's so misleading. So I have to say that before responding to your question, because people may be confused. When you think own resources, you think that you own the resource, right? It's yours. So the European Union, does it collect a tax, which would be its own resource? The answer is no. There is no such thing as own resources currently in the European Union. The European Union is fed by contributions from the Mambos. So the question about own resources is, can you do genuine own resources? You add the genuine to bring sense to the expression own resources. The genuine means you really own it, right? You have your own tax. And on that, there is some progress. There is some progress with the likelihood that Sibam, the Carbon Border Adjustment Mechanism, will be in part allocated to the budget. And the logic here is the same as custom duties. You know, when you have tariffs, you collect custom duties. And the custom duties are precisely own resource of the European Union. And the genuine one, because you collect something, you collect a tax, you collect a levy, when some goods come into the common market, the internal market. And even though it's the national custom offices which collect the tax, it goes subject to pretty big part kept, I think it's 20 plus percent kept by the countries. It goes to the EU budget. And the Sibam is a bit the same logic. The Sibam is a carbon border adjustment mechanism, when some steel or some aluminum, which was not taxed or priced in terms of carbon, whose carbon was not priced before it enters the European Union. The EU will take the difference between the price on the EU market of carbon and the price which was levied by the country. And very often it's zero. So the European Union would collect that. So Sibam, I think there is agreement that Sibam should go to the European budget as a non-resource. We'll see whether it happens, but there is consensus. And it fits pretty well with the idea that own resources should fund the genuine non-resources. It should fund EU public good and fighting climate change is an EU public good and it's better developed, deployed, implemented at the EU level than at the national level, so that makes a lot of sense. So progress to be expected there. Progress already made with the plastic levy, the plastic tax, plastic waste tax. So if a country is very bad at eliminating plastic and there is plastic waste, it will pay a levy. So it's not really a tax, it's called a tax, it is not, it's a contribution based on statistics or based on the actual waste of plastic and this was adopted. So it's not only expected progress, it's realized progress and that was the last own resource adopted by the European Union back in 21 if I'm not mistaken. And finally you mentioned the DST digital service tax. We started the podcast with the global minimum tax as a great success back in 2021 with many countries agreeing it. Actually they agreed it on it as part of a package which was a two-pillar package. You had piled two the minimum tax and you had piled one which was how to tax the digital companies or how to reallocate taxing right among countries so that the countries where the most successful companies in the world, the tech companies, the semiconductor companies, the luxury companies, pharmaceutical companies, the largest and most profitable companies in the world would be taxed on their rent, on their access return, the big profit, I don't know how to call it, but the juicy profits, right, they would be taxed more on the market. And for the Europeans, what does that mean? That means that yes, the Chinese may tax the French and Italian luxury business a bit more than they do currently, but it means that the Europeans would tax the tech companies more than they do today. So the US would give a part of the rent and the Europeans would get a part of it. That was part of the deal, 2021, five years later, where are we? Well, there is an agreement on how to do it, there is an agreement on how to write a multilateral convention, which would be needed to implement it, but there is no agreement to sign this instrument and to implement it. And the DSTs, the digital service taxis, were already five years ago, or more than five years ago, it started in 2018, 19, they were the way for countries to say, as the Americans will never sign a multilateral instrument, and therefore we cannot tax the profit of these companies because our tax treaties don't allow us to do it. We'll do it unilaterally through digital service taxes. And the EU Commission on Next Generation EU said, well, we should put in place a digital service tax in the European Union or take a percentage of the global agreement if there is a global agreement. There is no global agreement and there is no European digital service tax. You just have digital service taxes in France, in Spain, in Italy, in Hungary and in a couple in Austria, a few other countries, but it's not European. And guess what? The US said, if you do that, we shoot you dead, or kind of. I mean, they are going to take serious measures to fight these, and that's where we are. So will Europe try to do a digital service tax or take part of the global deal? There will be no global deal for the time being. And I guess that the countries which are the most sensitive to trade, Germany and others are not so keen to take unilateral measures. So here, no success, no progress, but we'll have to see what happens. And if I may add a last note to that, I guess that artificial intelligence will probably trigger this debate further. But that AI companies will immediately make massive profit, they are currently making massive losses. But at some point they will make profits. And the question is, who's going to tax these profits? Will it be, again, the Americans or will it be shared with the Europeans? And here it's even more sensitive than was the case with the digital platforms. Because with AI, you will have a disruption on the labor market, which will cost a lot of public money to the governments of Europe because we have a social net, right? So they will see an increase of the expenses, but they will not tax the profits of the American or Chinese companies providing the services, which will increase the tension in international relations on how to tax these companies. So it responds to your question, plastic tax done, si bam, probably soon to be done, digital taxation, don't see it yet. When I was first learning about this stuff, people told me tax policy is social policy. And I try to keep that in mind in understanding the role of these things. I want to ask you guys just some nuts and bolts questions about the EU. Pascal, you were mentioning that the plastic's tax isn't really a tax, it's a levy. My understanding, and correct me and explain it better to listeners, as I'm wrong, is that si bam and ETS also are not taxes strictly speaking. They are regulations that generate money. Why is this important? Because when you do some sort of EU regulation, you're involving the the codicision full set, the European Parliament, the Commission, the member states, and they have to sit down and hash it out. Other things that are sort of true tax policy measures have to be done only by the member states and only via unanimity. So the Commission can propose things, but only the member states can take them forward. And then on top of that, once the member states are collecting attacks, they get to decide what to do with it, whether they keep it, whether they pass some on to Europe or how that works. Is that an okay overview of how the system works? It is. No, no, it's an accurate one. I try to summarize it with a policy/political dimension. What you're saying is that tax remains mostly domestic, if not exclusively. So that drives us back to fundamental principles like consent to tax. So let's step back. Tax is core to sovereignty. Consent to tax is what makes a nation, and we don't have a European nation yet. So the member states, when signing on the treaties, said, well, we agree to have a qualified majority in a number of areas, but not on tax. Tax is core to our sovereignty. We can agree common rules, and there are some in direct taxation, on VAT. You have a framework, you have common rules on that, even though it's not fully harmonized. But on direct taxation, you do not have a base in the treaty to harmonize direct taxation. You can do it for the interest of the internal market, so it's indirect, right? And it's very little, because you need unanimity. Unanimity is a translation of the fact that tax is core to sovereignty, and consent to tax is exercised at the national level, not yet at the European level. And as a result, what you have is a system by which you need all the countries to agree. And that explains that you have very little direct tax harmonization in Europe. You were talking about C-Bam and ETS, the emission trading system and the carbon border adjustment mechanism. What's interesting there is how do you put a price on carbon? You can tax it, or you can do a market, right? And Europe had to do a market, because there you didn't need unanimity. Why? If you had to introduce a tax, you would have had to convince everybody around the table, including the Eastern European countries, which are more sensitive to that, for obvious reasons, because they would suffer more from putting a tax on or price on carbon. And as a result, the European Union decided to go that way, not because it was the best, maybe it was the best, but mainly because they couldn't do tax. So Europe is on tax a bit crippled in terms of taking unanimous decisions, and paradoxically, and a bit sadly, I would say. The progress in Europe on direct taxation has been big over the past 10 years, but because they just copied, pasted, what the OECD was doing. You see, why? Why is it the case? Because when Europe has to move, it has to move without harming its competitiveness vis-à-vis the rest of the world. So if you decide to, let's take an example, put an end to bank secrecy in Europe. And you just act within Europe. All the money will go to Switzerland, which is not part of Europe and which has bank secrecy. So you need to level the playing field, and not need the OECD by bringing all the countries across the world, was able to provide for the level playing field. And once it was assured, Europe could move. And that's why Europe copied, pasted, what the OECD did. So our hope is that Europe could take the lead, and as we said earlier, talking about the U-tax observatory, I'm not sure that Europe will take the lead on deploying tax policies, which will supersede domestic legislation. But Europe could be something like a think tank, I mean, the mega think tank, helping countries to move in the right direction on tax policies. So we need to find this, and we're part of this hybrid construction, right? EU hybrid construction, where I believe altogether we can be stronger, not necessarily by harmonizing the taxes, but by having coordinated, well coordinated systems with common rules, and the EU court of justice, of course, applies the non-discrimination principles, and so which allows us to go a step further. So yeah, what you described was exactly these fact that tax is called to sovereignty. You need unanimity, and therefore you cannot necessarily do much altogether. It's super interesting, and the OECD has most of the European Union countries in it, but not all of them, and the countries that are formal OECD members are a smaller group than the ones that signed on to some of these bigger deals that you talked about. There's really a lot of overlapping networks here. Also for American listeners, VAT is of course the value added tax, which is the European sales tax broadly speaking, that we have over here that's included in the price of post goods and services. Maybe I can interrupt you with my European accent and stop you with your American accent. VAT is not a sales tax. I mean, sales tax is an awful tax implemented by the Americans because they are unable to move to that for different reasons. So yes, it's a tax on consumption, but it's not a sales tax. It's a mechanism by which you eliminate double taxation. It's an extremely smart tax, not because it was invented by the French. It was in the '50s, but it's an extremely efficient tax and what's your interesting, and that's why beyond the joke I wanted to make the case, the Trump administration in particular does not understand VAT, and because you don't tax exports at that and you tax import precisely to ensure neutrality, the Americans say, "Hey, this is a tax which discriminates and which against the trade rules, and we need to penalize you for that." So no, it's not a sales tax, it's a much smarter tax, and one of the issues of the U.S. today, we don't have to deal with that, but that's a serious issue, especially with the deficit growing. The U.S. needs to collect money and only VAT would bring the money, and the reason why you don't have VAT is that the Republicans think that VAT is a big government, they don't like it, and the Democrats think that VAT is regressive, which is partly untrue, partly true, and that's why they don't like it. So sorry, I thought it could be an interesting transatlantic conversation there. I love this comment, and American listeners, if you're following the VAT debate, yes, absolutely. And it's going to be a fun one to watch in the U.S. because of the need for revenues, and the disagreement about how to tax consumption. Do you do it via a strict sales tax or a broader consumption buying stuff, revenue generating mechanism? I want to ask you now, I want to turn the crystal ball or the Rubik's cube and ask you a rule as someone who has worked in a national government trying to sort this out, like just how do we get our heads around that, like politically, what's useful to think about when thinking about how countries think about tax? That's a very good question. I think there's a number of dimensions which matter, right? If you're sort of in office or advising policymakers to stand out, one, obviously, this is the revenue. Governments, despite running deficits still care about, I would probably at least, to balance their budgets. So the revenue impact is something that's paramount, and which is also increasingly important, I think, given the fiscal situation in which we find ourselves. The second one is impact on the economy, and specifically on jobs, this is an often used indicator, whether that's the most important one from an economic perspective that we can debate, but the impact on jobs is something that's politically very salient, I would say. Less considered, and what I think at least should feature more is sort of a broader economic impact. We don't, and I think this is true to an extent as well, to the European level, we don't often see enough time and effort invested in doing the proper cost-benefit analysis of different tax proposals. Something at, not just direct, immediate impacts of a tax policy proposal on the revenue side and on the job side, but also thinking through some of the less obvious facts that tax policy may have, and that's something that we refer to earlier in this podcast on the core level, whether some of the direct in-direct consequences of tax. And I think that's an area where we could potentially make, or work, we could do some more on the cost-benefit side, X and D before we implement policy proposals. Thanks for that. We're closing it on the end of our time in the last part of our podcast. I would like to ask each of you, what are some things to watch in the year ahead? And what are one or two things that you wish most people knew about tax? We've covered so much ground in this podcast, and if you could simplify a couple of points out of all of this to help people focus, I'd be really interested to know what you think we should know and what you think we should watch. So in terms of things to watch, it's hard not to mention the MFF. I think that's the big debate that we will be looking out for over the next couple of months. What will happen to the discussion on new on resources? We know that historically they've tended to be very difficult, so I'm very curious to see where they will land. So that's definitely something that also from the approval side, I think we'll keep a close eye on. What's one thing that I wish we would talk about more when we talk about tax? And to me, that's that's a very first principle kind of question. And I think what we often tend to overlook is, and I think we mentioned it at some point at the beginning in this podcast as well, is that by taxing activities, transactions, we take away money from other actors in our societies. And that's also why this is so close to sovereignty and debates about the fiscal contract and social contract. And I think that's really important because it also shapes the way you then can look at these things in terms of what's the value you actually get from doing this. And I think that should add up, we should be very careful in coming up with new taxes because of this. And we should be very careful about how we then spend that money that we take from pockets in our economy, be that from corporations or individuals. Thank you. Pascal. That's a good question. What to watch, you agree with rule, the MFF, we'll be interesting, but more on the expanding side than on the on-resource side, but we'll have to watch that. More broadly, I believe the year to come, everywhere in Europe, you will have a debate on capital taxation versus labor taxation. How do you get the right balance there, which should foster growth while reducing inequalities? And that's really a common room that governments across Europe are facing. I believe that digital taxation will come back in the debate. This remains frustrated not to get the fair share of the levy on digital companies, so that's something indeed to watch. Finally, I would say as rule indicated, that tax is a means to fund a society. So the debate on tax shouldn't go without a debate on how you spend the money, and that's true in the different EU countries. And the last thing to watch, common, is the EU tax observatory on tax competitiveness and will feed you with many more podcasts, papers, articles, conferences, which will make everybody in love with tax, with whom. Thank you so much. You've been listening to the Sound of Economics, Rugal, with our tax experts, Pascal Santama, and rule dumb. I'm your host Rebecca Christie, I will plug my own paper on the future of taxing robots, which I wrote a couple of years ago, and because it's about the future is still of some interest. We will link to all of or many of our papers and past projects in the show notes, hope that some of you will fall down some rabbit holes and spend some time thinking about this really interesting and very dramatic and intriguing part of our society when you dig into it. Thanks so much. You can find all our stuff on our website, www.brugal.org. We'll see you next time. [Music]