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Tax-based EU own resources: an assessment

Author

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  • Philippe Cattoir

    () (European Commission)

Abstract

The ongoing intergovernmental conference (IGC) and the preparation of the "Financial Perspectives post-2006" i.e. the next multi-annual financial framework of the European Union, have led to new discussions on the issue of EU own taxes. As this issue is also likely to emerge regularly in future debates, it is useful to present a structured analysis of some of the pros and cons of giving taxing powers to the Union. Such an analysis has already been made in the past, notably in Agenda 2000, which presented the European Commission's position concerning the EU financial framework for the period 2000-2006. Several possibilities for a "genuine" or tax-based own resource (?EU tax?) were presented and assessed in Agenda 2000. However, that analysis requires revision and updating to take account of the considerable evolution of EU objectives and policies in recent years and to include an assessment of new possibilities, such as, for instance, a climate charge on aviation emissions. Eight criteria are applied to nine main candidates for EU taxation and comparisons are made with regard to these criteria. One of the main conclusions that can be drawn from this multi-criteria analysis is that there is no such thing as a perfect tax for the EU. All the main candidates that have been suggested for EU taxes have some pros and some cons. The inability of proposed EU taxes to meet fully certain criteria should not lead to the conclusion that these taxes should be dismissed, as has sometimes been argued in the past. On the contrary, the analysis presented here highlights the fact that the choice between one or several EU taxes would critically depend on a political choice as to which criteria should be considered essential and which secondary. Furthermore, an assessment of a tax as a possible candidate should ultimately have regard to its impact on the functioning of the overall financing system of the EU.

Suggested Citation

  • Philippe Cattoir, 2004. "Tax-based EU own resources: an assessment," Taxation Papers 1, Directorate General Taxation and Customs Union, European Commission, revised Apr 2004.
  • Handle: RePEc:tax:taxpap:0001
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    File URL: https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/tax_assessment.pdf
    File Function: final version, 2004
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    Citations

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    Cited by:

    1. Andrea Gebauer & Chang Woon Nam & Rüdiger Parsche, 2006. "VAT Evasion and Its Consequences for Macroeconomic Clearing in the EU," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(4), pages 462-487, February.
    2. Elżbieta Kawecka-Wyrzykowska, 2014. "Suggested changes of system of financing the EU budget: conclusions for Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 39.
    3. repec:prg:jnlpol:v:2018:y:2018:i:1:id:1177:p:78-98 is not listed on IDEAS
    4. Friedrich Heinemann & Philipp Mohl & Steffen Osterloh, 2009. "Who’s afraid of an EU tax and why?—revenue system preferences in the European Parliament," The Review of International Organizations, Springer, vol. 4(1), pages 73-99, March.
    5. Maciej Cieslukowski & Rui Henrique Alves, 2006. "Financial Autonomy of the European Union after Enlargement," FEP Working Papers 217, Universidade do Porto, Faculdade de Economia do Porto.
    6. Spengel, Christoph & Heckemeyer, Jost Henrich & Bräutigam, Rainer & Nicolay, Katharina & Klar, Oliver & Stutzenberger, Kathrin, 2016. "The effects of tax reforms to address the debt-equity bias on the cost of capital and on effective tax rates," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, volume 65, number 148156.
    7. Iain Begg & Henrik Enderlein & Jacques Le Cacheux & Mojmir Mrak, 2008. "Financing of the European Union Budget," Sciences Po publications info:hdl:2441/10059, Sciences Po.

    More about this item

    Keywords

    European Union; taxation; budget; own resources; VAT; CIT;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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