Directors and management are rightly concerned with maintaining a competitive edge in their markets. Taxation is sometimes a major cost and the extent of the tax leakage in any corporate structure can make the difference between a competitive advantage and loss of market share.

Incentive packages and spending in the right quarters are also essential in order to stimulate growth- David Marinelli

The net income received at the end of an operation or business activity by an entrepreneur may also dictate whether the entrepreneur will undertake such an enterprise or not in the first place.

This is one side of the story. The other side is the one that fills the financial press and this is the tale of woe to do with over-leveraged government balance sheets and budgets and bankrupt countries.

The eurozone average ratio of government borrowing to GDP stands at 87 per cent. As this is a mean, one can safely assume that there are more than just a few countries with their back to the wall.

Governments have obligations and legitimate costs and these do need to be met.

One may be of the opinion that vote-driven politicians have over-spent and compromised their country’s future in order to get re-elected and this may well have happened over successive generations of governments.

The latter argument is now, sadly and to a large degree, irrelevant. Paying taxes is part of the solution and citizens need to take serious note of this.

Governments have only two options in order to balance their books, decrease costs or increase taxes or a hybrid or balancing act between these two possible courses of action. EU governments do find themselves today in a “lose lose” situation. Cost reduction means a reduction in social services, pensions, investment in infrastructure, civil service wages, incentives to business and, hopefully, also in politicians’ remuneration and expenses.

Tax increases mean less consumer spending, less investment by the private sector in general and less jobs. Any combination of these two elements will only result in one or another variation on a downward spiral leading to economic and social chaos and not a solution to the problem at all.

The solution to the problem would need to have elements that include a lowering of taxation across the board and a combined level of VAT, income tax and/or corporation tax and social security and/or pension contributions that is certainly less than 50 per cent of a person’s gross earnings.

People need to know that what they get left with is more than 50 per cent of what they work hard to earn after all direct and indirect taxes have been paid. If the mathematics does not add up and governments do not cover their costs, one cannot but ask why government is costing so much.

Incentive packages and spending in the right quarters are also essential in order to stimulate growth. Austerity is all well and good however austerity measures cause economies to contract and where is the growth coming from and more importantly the jobs? Governments need to enter into a charter with their citizens.

On the one hand governments should not over-tax their citizens, limit their spending and generally live within their means.

On the other hand citizens should live up to their civic duty and pay taxes when these are reasonable and governments held accountable.

In other words what is needed is a balancing act of a different kind, one that requires a more enlightened mind frame and leadership.

The EU has shown itself to be bereft of sound economic advice. It should also be said that the situation has now become extremely entangled and one may well despair of being able to unravel it.

What appears to be unavoidable in the EU at this juncture and with the current approach, at least in the short to medium term, is that governments will continue to intensify their efforts to catch as many taxpayers in their tax nets by whatever means and that this will continue to cause economies to contract with less taxes being as a result collected followed by harsher government policies to collect more taxes.

This vicious cycle does not end up in a good place and, more importantly, there is another way.

Mr Marinelli is CEO of the Portman International Group, a financial services group.