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Europe`s new border taxes

Author

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  • Sijbren Cnossen
  • Erns Verwaal

Abstract

Instead of abolishing internal border controls in 1993, the European Union (EU) replaced them with VAT and statistical requirements that appear to be just as onerous. For Dutch businesses, the compliance costs of the new requirements are, on average, 5 per cent of the value of their intra-EU trade. This figure is probably higher for other EU Member States. Obviously, the costs constitute a (differentiated) border tax that impedes intra-EU trade. The paper analyses the determinants of the compliance costs, as well as their effect on intra-EU trade intensity. The paper submits that the differential compliance costs violate the non-discrimination provisions of the EC Treaty. Suggestions are made to reduce them.

Suggested Citation

  • Sijbren Cnossen & Erns Verwaal, 2001. "Europe`s new border taxes," CESifo Working Paper Series 434, CESifo.
    • Handle: RePEc:ces:ceswps:_434
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    References listed on IDEAS

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    1. Richard Bird & Pierre-Pascal Gendron, 2000. "CVAT, VIVAT, and Dual VAT: Vertical ``Sharing'' and Interstate Trade," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 753-761, December.
    2. Marsha Blumenthal & Joel Slemrod, 1995. "The compliance cost of taxing foreign-source income: Its magnitude, determinants, and policy implications," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(1), pages 37-53, February.
    3. Richard Bird & Pierre Gendron, 1998. "Dual VATs and Cross-Border Trade: Two Problems, One Solution?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 429-442, July.
    4. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    5. Charles McLure, 2000. "Implementing Subnational Value Added Taxes on Internal Trade: The Compensating VAT (CVAT)," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 723-740, December.
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    Cited by:

    1. Genser, Bernd, 2003. "Coordinating VATs between EU Member States," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 735-752, November.

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