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Journal-istic: The EU’s influence on national tax systems

In the latest issue (7/2010) of the “Journal of European Public Policy“, Achim Kemmerling* asks the following question (link to the article):

Does Europeanization, the single market in particular, lead to convergence in national tax policies?

He starts his article by pointing to four possible major mechanisms drawn from the literature that may explain why national tax policies converge, namely (1) competition, (2) co-ordination, (3) imposition, and (4) learning.

To see whether there has actually been convergence in tax policies and to weight European from international effects, Kemmerling first compares quantitative data on 9 long-term EU and 9 non-EU OECD countries’ VATexcisesCIT, and PIT rates and revenues between 1983-2003.

He finds that there has been a stronger convergence for VAT and excises (indirect taxes) of the EU countries compared to the OECD countries while CIT and PIT have rather diverged between EU member states over the time period observed.

Through decision-making analysis Kemmerling then explains that the convergence of indirect taxes could in particularly be explained by the process of policy learning among member states, imposition of rules by the Court of Justice but also by the fact that EU countries have been using the EU as an excuse for unpopular tax raises (e.g. of their VAT).

On the other hand, the divergence of direct taxes is also explained by the widening of the single market, which has put more pressure on EU member states to compete over their income taxes (in a European and global environment of tax competition).

In summary, the single market has contributed to convergence and divergence of taxes in the EU, depending on the type of taxes we look at.

* Side note: Kemmerling has been teaching one of my first seminars (on political economy) at the Free University in Berlin when I was still a student.


In the category “Journal-istic” I look into current research in EU affairs published in scholarly journals.



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