Chapter 15: Financing Social Protection and Social Equity in Europe
Dominique Plihon INTRODUCTION 15.1 Social protection is one of the building blocks of European democracies. A significant measure of social equity has been achieved through a high level of public spending and taxation within quite different national institutional frameworks (section 2). But globalization is threatening European social models through competition among national social and fiscal systems (section 3). Today, there is a need to meet this threat by preventing tax competition, by the harmonization of fiscal policies through cooperation and through new forms of taxation (section 4). In the context of a globalized world dominated by transnational corporations, ‘corporate social responsibility’ can be a way to improve social equity and environmental outcomes provided international standards are binding (section 5). 15.2 SOCIAL EQUITY, PUBLIC SPENDING AND TAXATION IN EUROPEAN COUNTRIES The level of public spending and taxation is much higher on average in European countries than in other industrial countries, such as Japan and the US. One of the major reasons for these differences between European countries and other major industrial countries is the importance of public social expenditure which is higher, on average, in Europe. However one must note that, in the context of globalization, there has been a recent trend towards a narrower gap between European countries and other OECD members, as shown by Table 15.1. Furthermore, as seen in Table 15.2, ratios of social protection expenditures to GDP are, on the average, significantly lower among some of the most recent members of the European Union, the countries previously...
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