National Ecomonic Practicies: Influence of Tax Policies on the Economic Processes of the Old and the New EU Democracies

Abstract

The European Union operates within the framework of monetary and fiscal policy in accordance with uniform rules, but there is also a region where this rule is not applied. Direct tax policy as part of fiscal policy belongs exclusively to the competence of the individual national economies. Thus, the tax policy of direct taxes (specifically corporate tax) is the result of political decision-making processes at the national levels. The research focuses on 8 EU countries of two groups (old and new democracies). The aim of the article is to identify the potential impact of corporate taxes on the stock market, emphasizing the differences between the old and the new EU democracies. Therefore, the hypothesis verified here is that the tax policy, represented by the corporate tax rate, has a significant effect on the stock market. Thus, the article clearly focuses on the interconnection of political and economic decision-making processes and their impact on the business environment in chosen countries. The main finding is that, in old democracies, the impact of corporate tax rates on stock markets is generally higher than in new democracies.