Question

The members of the EU do have relative freedom to set their own fiscal policies— government spending, taxation, and the creation of government surpluses or deficits. They are expected to keep deficit spending within limits.

Select one:

True

False

Answer 1

True

Explanation

The four fundamental freedoms have been legally guaranteed since 1986: They state that goods, services, capital and persons can move without restriction within the EU.On taxation front.EU has two components: direct taxation, which remains the sole responsibility of Member States, and indirect taxation, which affects free movement of goods and the freedom to provide services in the single market.With regard to direct taxation, the EU has however established some harmonised standards for company and personal taxation.On indirect taxation, the EU coordinates and harmonises law on value-added tax (VAT) and excise duties.Hence it can be fairly concluded that EU have freedom to set their own fiscal policy and consequently they are expected to keep a check on deficit spending.