Eastern European Integration and Tax Competition

Katrin Rabitsch

Publication: Working/Discussion PaperWU Working Paper

Abstract

The member countries of the enlarged European Union show large differences in the structure of their tax systems. While consumption taxes have been largely harmonized over the past decades, differences remain in taxes on factor incomes, in particular on capital income. Also, effective tax rates on capital income in Central and Eastern European countries (CEEC) have been falling substantially over the last decade- a trend that may suggest that some tax competition has taken place in the enlarged European Union. The contribution of this paper is twofold. First, it presents and contrasts effective tax rates of Western European countries with those of the CEEC. Second, from a theoretical aspect, it presents a model framework within which a quantitative macroeconomic analysis of tax competition between the two regions can be conducted. In addition the model suggests that part of the large real exchange rate appreciation and current account deficits that CEE countries have experienced during the last decade might be attributed to effects from tax competition. (author's abstract)
Original languageEnglish
Place of PublicationVienna
PublisherSFB International Tax Coordination, WU Vienna University of Economics and Business
Publication statusPublished - 2007

Publication series

NameDiscussion Papers SFB International Tax Coordination
No.26

WU Working Paper Series

  • Discussion Papers SFB International Tax Coordination

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