Abstract

In advance of the review of the EU budget foreseen for 2008/2009, the idea of a shift of the EU financing system from national contributions to an EU tax has been repeatedly voiced. This paper is at first dedicated to an extensive overview of the arguments in favour of and against such a step. Then, a positive analysis is conducted which examines using a static approach whether an EU tax might create a distribution pattern which can be accepted by the national governments represented in the EU Council. Our results indicate that, in addition to the major drawbacks of an EU tax derived from the normative analysis, no tax exists which might create a distribution pattern of the EU contributions which is at least roughly similar to the existing one. Therefore, given the veto power of the national representatives in the Council, the introduction of an EU tax is only realistic if it was accompanied by a reinforced correction mechanism. Hence, an EU tax would not solve the shortcomings of the current fiscal constitution.

Contents:

1. Introduction
2. Overview on frequent EU-tax proposals
3. The pros
4. The cons
5. Positive analysis: The distributive consequences of EU
taxes
5.1 Indirect taxes
5.2 Direct taxes
6. Results
7. Conclusion
References