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Appendix 2 : Taxation in Europe : Towards more competition or more co-ordination ?


  • Henri Sterdyniak

    (Observatoire français des conjonctures économiques)


Taxation is high in EU countries. Tax-to-GDP ratios stand at around 40% compared with 25% in Japan and the US. This high level of taxation provides the funding of the European social model characterised by a high level of public expenditure and transfers. Apart from governing powers (armed forces, police, justice), the State provides free services to households (education, health); finances public infrastructures, research, culture; pays significant social transfers (family policy, minimum income) and social insurance (pensions, unemployment). Ageing populations imply higher pensions and health spending; technical progress leads to higher education and research spending; rising social exclusion implies higher assistance benefits. People ask for more public infrastructure and higher security spending. Military spending as well as aid to developing countries seem to be required if countries wish to play a major role internationally. All these elements make the rising trend in public spending difficult to resist. Besides, European countries think that public spending should be on a contributory basis. It makes sense to have people on highest incomes or wealth pay more for collective spending, as they benefit most from the way the social system is organised. Taxes must reduce income inequalities. It is hence crucial for European countries to remain entitled to collect tax revenues, according to democratically agreed rules. Section 2 discusses how the European social model is at risk in a global world; it discusses several strategies for European taxation: competition, unification, coordination. Section 3 provides a descriptive analysis of tax structures and trends in Europe. Section 4 deals with income tax coordination. Section 5 addresses social contributions coordination. Section 6 deals with corporate taxation. Section 7 concludes with a strategy for tax co-ordination.

Suggested Citation

  • Henri Sterdyniak, 2005. "Appendix 2 : Taxation in Europe : Towards more competition or more co-ordination ?," Sciences Po publications info:hdl:2441/5063, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/5063

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    References listed on IDEAS

    1. Isabelle Joumard, 2003. "Tax systems in European Union countries," OECD Economic Studies, OECD Publishing, vol. 2002(1), pages 91-151.
    2. Henri Sterdyniak & Pierre Villa & Département analyse et prévision de l'OFCE, 1998. "Pour une réforme du financement de la Sécurité sociale," Revue de l'OFCE, Programme National Persée, vol. 67(1), pages 155-205.
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    4. Réjane Hugounenq & Jacques Le Cacheux & Thierry Madiès, 1999. "Diversité des fiscalités européennes et risques de concurrence fiscale," Revue de l'OFCE, Programme National Persée, vol. 70(1), pages 63-109.
    5. Mireille Chiroleu-Assouline, 2001. "Le double dividende. Les approches théoriques," Revue Française d'Économie, Programme National Persée, vol. 16(2), pages 119-147.
    6. Jacques H.Drèze & Edmond Malinvaud & Paul De Grauwe & Louis Gevers & Alexander Italianer & Olivier Lefebvre & Maurice Marchand & Henri Sneessens & Alfred Steinherr & Paul Champsaur & Jean-Michel Charp, 1994. "Croissance et emploi : l'ambition d'une initiative européenne," Revue de l'OFCE, Programme National Persée, vol. 49(1), pages 247-288.
    7. Gaël Dupont & Henri Sterdyniak & Jacques Le Cacheux & Vincent Touzé, 2000. "La réforme fiscale en France : bilan et perspectives," Revue de l'OFCE, Programme National Persée, vol. 75(1), pages 183-242.
    8. Odile Chagny & Gaël Dupont & Henri Sterdyniak & Paola Veroni, 2001. "Les réformes des systèmes de retraite en Europe," Revue de l'OFCE, Presses de Sciences-Po, vol. 78(3), pages 97-208.
    9. CEPII & OFCE & Marie-Hélène Blonde & Gérard Cornilleau & Pascal Helwaser & Jacques Le Cacheux & Jean Le Dem & Henri Sterdyniak & Bill Robinson & Stephen Smith, 1990. "Vers une fiscalité européenne ?," Revue de l'OFCE, Programme National Persée, vol. 31(1), pages 121-189.
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    11. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
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    Cited by:

    1. Jérôme Creel & Francesco Saraceno, 2008. "Automatic Stabilisation, Discretionary Policy and the Stability Pact," Sciences Po publications 2008-15, Sciences Po.

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