Europeanizing Corporate Taxation to Regain National Tax Policy Autonomy

Published: June 20, 2007, 6:45 pm

Tags: eu politics, globalisation, eu, national autonomy, politics, tax

By Christian Kellermann, Thomas Rixen & Susanne Uhl As a reaction to the German corporate tax reform, the English and Dutch governments also announced tax reductions. This demonstrates once again that tax competition is a very serious constraint on national tax policies. All over Europe, politicians argue that tax competition compels them to reduce tax rates to maintain their local advantages for international investment. While governments thus admit that they are pressured to lower taxes because of tax competition they insist, on the other hand, upon maintaining their national sovereignty in tax policy matters. Arguing that tax sovereignty is an essential part of their statehood, member states of the European Union have, in the past, always refuted any attempts to even partially harmonize direct taxes in Europe. Member states’ insistence on tax sovereignty is counter-productive because, although they formally have the exclusive legal competence over tax policy, in fact,

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