Replace direct aids with reduced taxation

Even if there are rules against state aids, within the European Union there ere different programs based on direct aids to certain economical activities and/or regions. They are based on political agendas that decide what to subsidize, in many cases based on lobby groups or electoral interests. Even if those political programs are not based on the interest of lobby groups, the fact of forcing investments in specific sectors/regions on a specific way can lead to massive bad decisions. From the point of view of market structure and competition, direct aids need complex ex ante and/or ex post conditions that are difficult to define and put in practice on an effective way. Moreover, those programs have associated a heavy bureaucratic structure to plan, monitor and supervise the usage of public funds.



What I propose is to eliminate many of the existing programs based on public aids to economical activities and substitute them by reduced taxation over profits focused on certain economical activities and/or regions. This can boost economical activity and investment with less bureaucratic cost and in a more neutral way avoiding massive errors caused by centralized political decisions about where to invest. In addition, tax reduction can be much more neutral from the point of view of market structure and competition, because all economical agents can access to the same public policy instruments.