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The Green Tax Revolution Europe Needs

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LONDON – On July 17-18, European Union leaders will meet in Brussels to try to reach an agreement on the bloc’s proposed €750 billion ($852 billion) recovery fund. Member states currently disagree on several issues, including the shares of grants and loans in the package and which conditions, if any, should be attached to the disbursements. But once leaders clinch a deal, the most important question will be how member states should spend the money. The answer is far from obvious.

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    Governments have two potentially conflicting objectives. First, European economies need a demand boost to compensate for the restrictions on “social” forms of consumption (restaurants, bars, concert halls, and the like) and to support spending by people whose incomes have fallen. In a recent working paper, researchers at the ifo Institute in Munich used surveys of German firms to show that COVID-19 is........

    © Project Syndicate