Tax Competition in an Expanding European Union

Davies, Ronald and Voget, Johannes (2008) Tax Competition in an Expanding European Union. Centre for Business Taxation WP 08/30.

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This paper empirically examines whether expansion of the EU has increased international tax competition. To do so, we use a simple model of tax competition to determine how a given country weights the taxes of others when choosing its own tax. This indicates that the market potential of a country (which includes both domestic consumption and exports) is the appropriate weight. This is an improvement on the ad-hoc and often endogenous weighting schemes used elsewhere. Unlike those studies, we find robust evidence for tax competition. In particular, our estimates suggest that EU membership affects responses with EU members responding more to the tax rates of other members. This lends credence to the above noted concerns.

Item Type: Other Working Paper
Keywords: European Union; taxation
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 26 Apr 2012 15:57
Last Modified: 15 Oct 2015 02:18

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