IREF - Institute for Research in Economic and Fiscal issues
Fiscal competition and economic freedom
The winners of the 2007 IREF Essay Contest, Ms. Julia Toser from Hungary and Mr. Massimiliano Trovato from Italy received their awards on official ceremony in Prague on April 18. The event was part of the Prague Conference on Political Economy (PCPE), organized by the Economics University. The two essays on the topic of European tax have been published in IREF Monographs 2008.
First prize - Julia Toser, Hungary "Super size it? A rationale against feeding the Leviathan"
Abstract: After the creation of the single market and the introduction of a common currency for the European Union, the question raises: why not a common taxation system? Obvious, say keen integrationists. This paper discusses six arguments to prove that it is unnecessary, moreover, legally and politically impossible for the European Union to take the same path as the United States did when its tax burdens raised from 3% to above 20. According to the Sapir report, presented in 2003 ‘… the EU budget is a historical relic. Expenditures, revenues and procedures are all inconsistent with the present and future state of EU integration.’ However, simply enlarging the budget by a common European tax is not a solution.
Second prize - Massimiliano Trovato, Italy "The threat of fiscal harmonization"
Abstract: Many influential voices have, in the recent past, spoken in favor of the opportunity to give the European Union a coherent and centralized tax policy. The keyword used by these people is “harmonization”. They share the opinion that all member states should conform their own tax systems to the directions of Brussels bureaucrats – as already happens for VAT. Some of them have pushed the argument even further, to the point that the Union should be given the power to levy taxes on its own, and not just to tell member states how to do that. What if they succeeded? How likely is such prospect? There are of course many serious obstacles to this process. According to a realist approach to the politics of European integration, one should not underestimate the extent to which people feel uncomfortable with the idea of European integration itself. As the tortuous path the European Constitutional Treaty is undergoing shows, citizens are indeed far less persuaded than their rulers in Brussels (or in their respective capital cities) that transforming what was originally conceived as a free exchange area in some kind of a superstate would be a brilliant idea.