Toward a Common Tax Regime for the European Union Countries

Abstract

The tax burden on wages, profits, property, and goods or services has a serious impact on crosscountry competiveness, something that, in turn, impinges strongly on the actual economy of common markets such as the European Union (EU). While the mobility of productive factors is directly related with country tax-regime differences, government budget funding from tax revenues and rates are the main fiscal policy tools. This article analyzes the trends, similarities and differences between the tax regimes of European Monetary Union (EMU) for the period from1995 to 2019. The methodologies we employ include time series analysis, regression analysis and multivariate cluster analysis. The data are mainly collected from the OECD database and tax revenue departments at country level. We argue that there are significant differences among the tax regimes of EU countries and that no policy has been implemented to ensure tax homogeneity across the EU, nor is there any likelihood of such. The anarchy in fiscal policy is an obstacle for the European Integration. Budget deficits have an impact on taxation and countries, invariably, manage the recent debt crisis by selecting different taxes as fiscal policy tools. Our article presents the differences between tax regimes of EMU countries and shows that the level of economic growth affects the structure of taxes at work and alters the performance of different types of taxes; is also wishes to explain the factors that differentiate tax regimes by using multi dimensional criteria and variance analysis. Our work contribute to the debate toward a common tax regime between EU countries and our analysis is concentrated on this.

Investigating the Relationship between Tax Revenues and Tax Ratios: An Empirical Research for Selected OECD Countries

“…As Laffer (2004) 5 described, the basic idea behind the relationship between tax rates and tax revenues is that there exists a trade-off between two effects on tax revenuethe arithmetic effect i.e., reduced tax rates yield reduced tax revenues and the economic effect i.e., tax cuts create incentives to increase output, employment and production (Liapis et al, 2012;. The arithmetic effect always works in the opposite direction from the economic effect and as a result the overall effect on tax revenues is rather ambiguous.…”

Export Structure and Economic Performance in Transition Economies

“…Besides, fostering exports encourages product specialization, productivity growth, efficient allocation of resources, and exploitation of economies of scale (Liargovas, 2012;Awokuse, 2007;De Loecker, 2007;Alcala, 2004;Emery, 1967). As a cherry on top, export expansion can enhance capital formation by financing imports of capital and intermediate goods (Emery, 1967;Akpokodje, 2000) while it affects the taxation system of the economy (Liapis et al, 2012;Galanos et al, 2014).…”

Assessing PIIGS Country Performance against Themselves and the EU

“…The OCA theory infers that everyone benefits if fiscal balances are maintained while labor is free to move under a common currency as a means to achieve macroeconomic equilibrium (Saunders, 2011). Worker mobility in the EU is a function of the tax regimes in the various member countries and provides workers with the ability to move to other locations in search of better opportunities (Liapis et al, 2013). However, at least one study noted that labor mobility is restricted by the continued use of non-tariff barriers and subsidies (Silvia, 2004).…”