Tax Competition and Tax Co-operation in the EU: The Case of Savings Taxation

Katharina Holzinger

No 7, EUI-RSCAS Working Papers from European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS)

Abstract: It took the EU 35 years to achieve a co-operative agreement on co-ordinated measures of savings taxation in a world with mobile capital. Political science has offered two explanations for this co-operation problem. First, co-operation is difficult as a result of the heterogeneity of governments' interests. Countries with a small domestic tax base favour tax competition, while countries with a large tax base prefer tax co-operation. Second, co-operation is difficult as a consequence of specific characteristics of the collective action problem involved. The actors face a prisoners' dilemma. Both explanations have their limits. The first approach is not very good in predicting actual policy preferences of governments, and the second approach dismisses the fact that the EU offers co-operative institutions that should be able to resolve a dilemma. The paper proposes a model which refines these explanations and fits better the positions of EU governments and their problems of finding an agreement.

Keywords: game theory; regulatory competition; tax policy; harmonisation; policy coordination; positive integration; financial markets; directives (search for similar items in EconPapers)
Date: 2003-08-15
New Economics Papers: this item is included in nep-mac and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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