Modern society cannot function without a high level of investment, just
as it cannot function without a high level of taxation (or its
equivalent in communist countries). Both investment and taxation (as a
source of government revenue) are important for the level of production
and employment. No wonder then that governments are faced with an
increasing dilemma between higher taxation on the one hand and the need
for stimulating investment by tax reductions or allowances on the other.
Related to this is the choice between a market economy which is as free
as possible and detailed governmental measures for monitoring and
steering investments, not only with the intention to promote economic
growth but to further a nu mb er of other social interests as weil. This
is to some extent a political issue but the decisions it involves should
still be based on sound economic facts and considerations. In many
countries one of the important instruments for stimulating and steering
investment is the introduction oi\modification of investment incentives
within the framework of the tax system. The present book gives a lot of
information on this subject. It endeavours to create a conceptual order
in the somewhat chaotic multitude of incentives practised by the main
industrial countries and studies their economic effects. The authors are
weil equipped to do this because they were c10sely involved in the study
on this subject made by Erasmus U niversity Rotterdam at the request of
the Common Market Com- mission.
