Tax Harmonization Policy in a Changing European Union

The tax competition - tax harmonisation (TH) debate has of­ ten overlooked the fact that TH is not a simple and unitary phe­ nomenon. A brief survey of the European experience shows that actual TH is founded on various reasons and takes many different forms. Three factors have an important influence on the timing and content of TH: the main changes in the competition environ­ ment, the financing needs of the European budget, and the deci­ sion-making rules in tax matters. TH usually implies more inter­ national tax uniformity at the cost of less structural tax generali­ ty. The prospects for TH in the light of the provisions of the new Constitutional Treaty are ambiguous.