European Council agreed that coordination should be broadened to macroeconomic

Policy coordination in the euro area was faced in 2008 first of all with the challenge

of addressing the common global macroeconomic and financial shocks. With respect

to high food and oil prices, policy makers agreed on a common approach to avoid

distorting budgetary and other political interventions (Manchester agreement). As a

coordinated response to the financial turmoil, euro area Member States committed

themselves to implementing policy actions on an unprecedented scale, guided by EU

common principles. Regarding policy actions in the face of the economic slowdown,

the Council agreed that coordination should be broadened to macroeconomic

developments beyond fiscal policy. The need for monitoring competitiveness

developments within the euro area in the light of the recent experience was

recognised. As structural reforms have an added value for the euro area as a whole,

Ministers from the euro area Member States agreed to devote specific attention to

euro area recommendations. Concerning international representation, progress has

remained limited to the installation of first strategic dialogues with key partners.

Euro area Member States are recommended to under take structural reforms

In addition to respecting their country specific recommendations, euro area Member

States were recommended to undertake structural reforms that improve the

functioning of monetary union. They should target budgetary consolidation, the

quality of public finances, competition on product markets, especially in services and

financial integration, the alignment of wage with productivity developments and the

implementation of flexicurity principles on labour markets. A further strengthening

of both governance and international representation in international fora were

considered items the euro area should also focus upon. While there has been

considerable variation across policy areas and Member States, the euro area made

overall limited progress over the last year with meeting the recommendations

addressed to its Member States.

Tax Responses to the Global Economic Crisis

Countries worldwide are taking steps to counter the effects of the global financial and economic crisis. From a tax and fiscal perspective, the approaches taken thus far range from formal “stimulus” packages, to ad hoc measures, to temporary provisions, to accelerating the introduction of planned measures or alternatively scrapping them altogether. The 2009 budgets/finance acts of a number of countries have served as the platform for many provisions – in some instances, the measures specifically target the economic downturn and, in others, they incidentally mitigate some of the effects of the crisis. It appears that, in some cases, planned measures that have gone into effect were not drafted to address the challenges, but, because of the urgency of the situation, have advanced through the legislative process more expeditiously than they might otherwise have done.

The following provides a high level summary of responses, through tax and fiscal policies, of over 50 countries worldwide to tackle the crisis.

The focus is on implemented corporate, individual income and indirect tax measures, other types of fiscal measures and corporate governance, and proposed and deferred measures.