Open AccessInternational Tax Competition and Fiscal Policy of EU Countries
Author(s) -
Mirosław Krajka
Publication year - 2010
Publication title -
equilibrium
Language(s) - English
Resource type - Journals
eISSN - 2353-3293
pISSN - 1689-765X
DOI - 10.12775/equil.2010.002
Subject(s) - tax competition , economics , competition (biology) , globalization , fiscal policy , public economics , skepticism , autonomy , phenomenon , international economics , welfare , tax reform , economic policy , indirect tax , market economy , monetary economics , political science , ecology , philosophy , epistemology , quantum mechanics , law , biology , physics
Intensification of international tax competition, associated with the process of globalization and financial markets integration is recently becoming a very live issue, causing a lot of both enthusiasm and scepticism among politicians, economists, taxpayers. This is mainly because of its ambiguous effects - it may introduce, mitigate, or exacerbate inefficiencies in both private and public sector. In different models, tax competition may either limit or increase public expenditures and taxes on mobile factors, with differing welfare consequences. It poses a serious challenge to the autonomy of domestic fiscal policymakers and to the global economy in general. This paper reviews potential advantages and disadvantages of the phenomenon, facing commonly used hypotheses and beliefs with facts and numbers. Though it does not provide a clear-cut answer to the question of whether tax competition is good or bad, it gives an idea of its complexity and of great significance for the future of fiscal policy development.