Neumark Vindicated: The Europeanisation of National Tax Systems and the Future of the Social and Democratic Rechtsstaat

In this paper, the author makes a case against the transfer of tax collecting powers to the EU and instead argue in favour of rescuing the capacity of member states to tax effectively and fairly.

ARENA Working Paper 4/2015 (pdf)

Agustín José Menéndez

The power to tax is usually regarded as one of the last competences exclusively in the hands of the Member States of the European Union. As shown in this paper, this is a wrong assumption that results from a double optical illusion: the illusion that the power to tax equals the power to collect taxes – when the power to shape taxes through constitutional and statutory norms is also of great importance; and the illusion that with the abandonment of plans to harmonise national tax systems and create taxes that were genuinely European in the 1980s, the power to tax has remained firmly in the hands of Member States.

To fully appreciate the extent to which national tax systems have been Europeanised, the author distinguishes three distinct patterns of Europeanisation: Integration through tax harmonisation (prevalent up to the late 1970s); integration through the removal of tax obstacles (dominant from the 1980s to the explosion of the present European crises); and integration through fiscal consolidation (which is the growingly dominant pattern of transformation of national tax systems). This paper considers the causal role played by integration through tax harmonisation in the present European crises and explores the consistency of the emerging paradigm of integration through fiscal consolidation. The author concludes that what is needed is not to grant taxing powers to the EU, but to make use of European law to recreate the Member States’ capacity to tax effectively and fairly.

Tags: Constitutional Norms, European Union, Tax Harmonization, Europeanisation, European crises, Fiscal Consolidation, National Tax Systems, Power to Tax
Published Oct. 5, 2015 12:11 PM - Last modified Oct. 5, 2015 12:20 PM