While the economic integration of the EU is already on an advanced level due to the establishment of the Single Market and the European Monetary Union (EMU), it can be stated that some significant fields are lagging behind. Amongst others, the harmonisation of indirect taxes within the EU is a controversial topic (Genschel 2002: 16, Randzio-Plath 1999: 665). Any fiscal harmonisation hardly alludes to the funding basis of the public budget of the several MS. In the range of indirect taxes, value added tax (VAT), which is especially problematic for allocation politics, is already harmonised on a high level, while at the same time other excise duties were harmonised only hesitantly.
The aim of this paper is to examine the question of whether there is more harmonisation than competition in the field of indirect taxation in the EU. In general, the paper will deal with the question of what fiscal harmonisation actually is and which consequences can arise from a situation of competition for the government.
Table of Contents
1 Introduction and purpose of the paper
2 Definitions
2.1 Indirect Taxes – definition and relevance
2.2 VAT – definition and relevance
2.3 Excise duties – definition and relevance
3 Fiscal policy within the European Union
4 Diversity of fiscal systems within the EU member states
5 Harmonisation vs. Competition
6 Harmonisation of indirect taxation
6.1 VAT
6.2 Excise duties
7 Conclusion
8 Future prospects
Objectives and Topics
This paper examines the tension between fiscal harmonisation and tax competition within the European Union, specifically focusing on indirect taxation. It explores the legislative challenges, the impact of the Single Market on national fiscal sovereignty, and whether the current degree of harmonisation in VAT and excise duties effectively prevents market distortions or hinders competition.
- The theoretical distinction between direct and indirect taxes.
- Fiscal policy frameworks and legal foundations within the EU.
- The conflict between national fiscal autonomy and the pursuit of a unified Single Market.
- Comparative analysis of VAT systems and excise duty harmonisation across Member States.
- The socio-economic implications of tax competition versus tax harmonisation.
Excerpt from the Book
2.1 Indirect Taxes – definition and relevance
In contrast to direct taxes, indirect taxes are levied on production and consumption and are not borne by the ‘taxable persons’ (traders or industry) who pay them. Therefore, the tax is collected on behalf of the government and is passed on to the final consumer price, on which the burden falls (VAT and excise duties). This ‘theory of transfer’ means that the person liable for tax and the ultimate taxpayer are not identical (Hagen 2000: 25).
However, a classification only based on the criteria of ‘passing on’ can be considered insufficient, as sometimes it is not possible to pass on the taxes to consumers based on grounds of competition. Therefore, a classification on the basis of the will of the legislator is proposed. Indirect taxes are those for which the taxpayer and the liable tax person are not identical (Hagen 2000: 27 et sq.). In previous years, indirect taxes have been the most important taxes on the EU level; their share in 2006 accounts to 39% (see figures 1 and 2). Moreover, the broad stability in the implicit tax rate (ITR) on consumption in the EU-15 from the early 1970s until the early 1990s can be seen in figure 3. Although taxes on consumption decreased from 38.4% in 1965 to 31.9% in 2005 within the OECD countries, they still constitute the highest share of major taxes on the whole (OECD 2007: 2).
Summary of Chapters
1 Introduction and purpose of the paper: Outlines the importance of fiscal policy for European economic integration and defines the study's focus on indirect tax harmonisation.
2 Definitions: Provides fundamental definitions for indirect taxes, VAT, and excise duties, establishing the conceptual basis for the analysis.
3 Fiscal policy within the European Union: Discusses the legal framework and the role of EU institutions in governing fiscal matters and market competition.
4 Diversity of fiscal systems within the EU member states: Explains the reasons for the varying national fiscal structures and the limits of EU authority in direct tax standardisation.
5 Harmonisation vs. Competition: Analyzes the debate between harmonisation and competition in the context of globalization and the preservation of the welfare state.
6 Harmonisation of indirect taxation: Reviews the evolution and practical application of VAT and excise duty directives within the EU.
7 Conclusion: Summarizes the difficulties in achieving a fully harmonized system and the ongoing tension between national sovereignty and market integration.
8 Future prospects: Evaluates the future challenges for tax harmonisation, noting the slow progress and the impact of divergent national fiscal needs.
Keywords
European Union, Indirect Taxation, Fiscal Harmonisation, Tax Competition, VAT, Excise Duties, Single Market, Fiscal Policy, Economic Integration, Member States, Sovereignty, Tax Rates, Destination Principle, Origin Principle, Internal Market.
Frequently Asked Questions
What is the core focus of this research paper?
The paper investigates the conflict between fiscal harmonisation and tax competition within the European Union, with a particular focus on indirect taxes like VAT and excise duties.
What are the key thematic areas addressed in the study?
The study covers the legal foundations of EU fiscal policy, the definition and role of indirect taxes, the diversity of national fiscal systems, and the ongoing debate surrounding tax competition.
What is the primary research goal?
The goal is to determine whether the EU currently exhibits more harmonisation than competition in the realm of indirect taxation and what implications this has for Member States.
Which scientific methods are employed?
The author uses a qualitative analysis approach, reviewing existing literature, legal directives, EU treaty articles, and statistical data to assess the progress and limitations of fiscal harmonisation.
What content is covered in the main section of the paper?
The main section details the legal basis of EU fiscal policy, the specific harmonisation efforts regarding VAT and excise duties, and the theoretical arguments for and against tax competition.
Which keywords best characterize this work?
Key terms include European Union, indirect taxation, fiscal harmonisation, tax competition, VAT, excise duties, Single Market, and fiscal sovereignty.
How does the 'origin principle' conflict with the 'destination principle' in the paper?
The paper explains that while the origin principle simplifies border trade, it conflicts with the national desire to tax goods based on consumption destination, creating complications for cross-border companies.
What challenges does the author identify regarding fiscal representation?
The author highlights that varying requirements for fiscal representatives across countries like Belgium, Germany, and Great Britain can act as a barrier and infringe upon competitive neutrality.
- Citar trabajo
- Jean Knödel (Autor), 2008, Indirect Taxation within the EU – Harmonisation vs. Competition, Múnich, GRIN Verlag, https://www.grin.com/document/127278
