Notes

Outline

The EU Constitution and Tax Policy Dr. Gerhard Schick, Stiftung Marktwirtschaft

The EU constitution and tax policy Tax policy in the draft constitution What would have been a good solution? What would a good European tax policy look like? Deficiencies of the draft constitution

Tax policy in the draft constitution Article 58 EC 1. The provisions of Article 56 shall be without prejudice to the right of Member States: (a) to apply the relevant provisions of their tax law which distinguish between taxpayers who are not in the same situation with regard to their place of residence or with regard to the place where their capital is invested; (b) to take all requisite measures to prevent infringements of national law and regulations, in particular in the field of taxation and the prudential supervision of financial institutions, or to lay down procedures for the declaration of capital movements for purposes of administrative or statistical information, or to take measures which are justified on grounds of public policy or public security.

Tax policy in the draft constitution Article 87 EC 1. Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the common market.

Tax policy in the draft constitution Article 90 EC No Member State shall impose, directly or indirectly, on the products of other Member States any internal taxation of any kind in excess of that imposed directly or indirectly on similar domestic products. Furthermore, no Member State shall impose on the products of other Member States any internal taxation of such a nature as to afford indirect protection to other products.

Tax policy in the draft constitution Article 91 EC Where products are exported to the territory of any Member State, any repayment of internal taxation shall not exceed the internal taxation imposed on them whether directly or indirectly.

Tax policy in the draft constitution Article 92 EC In the case of charges other than turnover taxes, excise duties and other forms of indirect taxation, remissions and repayments in respect of exports to other Member States may not be granted and countervailing charges in respect of imports from Member States may not be imposed unless the measures contemplated have been previously approved for a limited period by the Council acting by a qualified majority on a proposal from the Commission.

Tax policy in the draft constitution Article 93 EC The Council shall, acting unani-mously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market within the time‹limit laid down in Article 14.

Tax policy in the draft constitution Article 94 EC The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market.

Tax policy in the draft constitution Two-step procedure: Unanimous decision on need to act. Majority decision on specific measures.

Tax policy in the draft constitution Two-step procedure: Unanimous decision on the need to act. Majority decision on specific measures.

What would have been a good solution? Distribution of powers between the Union and member states Rules for decision-making

What would have been a good solution?

What would a good European tax policy look like? No European taxes. Providing a legal framework for tax competition by member states that makes tax competition productive for European citizens.

Deficiencies of the draft constitution No clear limit to EU powers in tax policy. Lack of EU powers to impose and enforce a legal framework for tax competition against the specific interests of member states Harmonized European tax base for company taxation Multilateral tax treaty Automatic communication of information

The EU Constitution and Tax Policy Dr. Gerhard Schick, Stiftung Marktwirtschaft