Tax principles and tax harmonization under imperfect competition: A cautionary example

This paper shows that under imperfect competition, the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.

Tax policy when countries compete for third market exports

We examine the welfare and other consequences of tax policy in a third market export model where duopolists located in two countries compete in prices. With tax competition between governments, we allow for welfare-maximizing governments in the two countries to delegate tax setting responsibility to policy-makers who have different objectives than the governments. The unique equilibrium in the tax competition environment involves both governments delegating tax setting responsibility to tax revenue-maximizing policy-makers. This equilibrium yields higher welfare for both countries than the outcome when the governments delegate to welfare-maximizing policy-makers. The paper also compares tax competition with tax harmonization and shows that when the entire export market is served, tax harmonization improves the welfare of the country that houses the low cost firm, while the other country may be immiserized.

A Constituição Federal de 1988 e a integração regional : o desafio da harmonização tributária

As an effect of the growing interdependence in international relations, regional integration was conceived to face globalization, with a remarkable influence in politics and law, since the first steps of the European experience. In Latin America, regional integration ideas have blossomed in the 60 s. Among its experiences, MERCOSUL is the one with the most advanced objectives. However, MERCOSUL has not managed to achieve the objectives planned nor moved forward the integration process. Differently of what happened in Europe, in MERCOSUL the common market projected is concluded. It faced many disappointments throughout its brief history. As it matters to law, those were caused by the absence of supranationality, a mechanism that would allow MERCOSUL s decisions to be directly binding in the States with no need of bureaucratic proceedings to incorporate them to national legal systems. Among Latin American States, Brazil is probably the most resistant to integration process, due to Federal Constitution 1988 rigidity and legal professionals conservadorism towards opening legal system to international law. In Brazil hermeneutical standards are always based on national sovereignty and international law is referred as less important. The problems become more visible relating to taxation, a subject that plays an enormous role in integration process for its economic impact, demanding the execution of tax harmonization policies compatible to the integration levels aspired. However, because of the large number of tax rules in the Federal Constitution, structural changes initiatives face difficulties in order to be implemented. Actually, after two Constitutional Reforms on taxation, Brazil has not yet succeeded on promoting the necessary adaptations to regional integration. The research has confirmed the hypothesis that supranationality has indispensably to be adopted if Brazil really desires to move forward the integration process. But it has also been demonstrated that there are hermeneutical paths suitable to the constitutional profile which allow the adoption of supranationality, through the revision of the sovereignty traditional concept

Na granicy Unii Europejskiej – pozycja europejskich terytoriów autonomicznych w dobie globalizacji i integracji. Przypadek Wysp Alandzkich

The model of autonomy developed by the Aland Isles can provide a number of interesting solutions applicable in other territories. Territorial autonomy as a manner of ensuring the political and economic rights of the minority involves facing up to the challenges of European integration and globalization. It seems that the Aland Isles have successfully coped with this challenge. Firstly, they were able to present and promote their own interests during the accession negotiations in an efficient manner. Secondly, they maintained (and additionally strengthened by including it in the aquis communitaire) their separate, autonomous status and the guarantees of identity protection by virtue of limiting the rights of persons without domicile rights to purchase land and run business activity. Thirdly, they managed to obtain a special status excluding them from the process of indirect tax harmonization, thus ensuring considerable economic benefits. Fourthly, both Finland and the European Union confirmed their autonomy, demilitarization and neutrality allowing the Isles to retain their former status under the new circumstances. Fifthly, they obtained representation in the Committee of the Regions and a defined position on European matters in Finland. The skillful application of the existing solutions and the winning of an advantageous set of derogations and exceptions strengthened the position of the Isles both with respect to Finland and the international surroundings. The Isles’ economic, cultural and political protection was augmented. Alongside their participation in international organizations, such as The Nordic Board, the Aland Isles have remained active and discernible on the international arena.

O imposto sobre as transações financeiras : uma iniciativa europeia não consensual

Mestrado em Contabilidade, Fiscalidade e Finanças Empresariais