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Tax burden and competition in the European Union – Does it change?

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  • Szarowska, Irena

Abstract

Enlargement of the European Union and the globalization process significantly affect tax systems and fiscal policies of individual countries. The level and structure of tax burden is often discussed in the European Union, as well as what is more profitable – keeping tax competition or tax harmonization. Tax environment and tax burden are significant factors when deciding about investment allocation. For international comparison, the easiest way is to use statutory tax rates but the result may be rather inaccurate. More convenient way of comparison is comparing implicit rates where we may express impact of taxes on economic activities according to their functions. The paper first summarizes basic theoretic approaches to tax competition. Then it is followed by an analysis of level and structure of tax burden in the European Union in the period of 1995 to 2006. There is emphasis on the dissimilarity of results depending on the type of tax rates used, namely statutory and implicit. The aim is to verify the hypothesis that value of tax burden (measured by tax quota) falls in time and that indirect taxes outweigh direct taxes in the tax burden of the European Union.

Suggested Citation

  • Szarowska, Irena, 2009. "Tax burden and competition in the European Union – Does it change?," MPRA Paper 19934, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19934
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    References listed on IDEAS

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    4. Mr. Vito Tanzi, 1996. "Globalization, Tax Competition and the Future of Tax Systems," IMF Working Papers 1996/141, International Monetary Fund.
    5. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
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    7. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
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    Cited by:

    1. Somaya Ahmed Aly Abdel‐Mowla, 2012. "The Egyptian tax system reforms, investment and tax evasion (2004‐2008)," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 28(1), pages 53-78, January.

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    More about this item

    Keywords

    tax competition; tax burden; tax quota; implicit tax rate;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F2 - International Economics - - International Factor Movements and International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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