Tax Harmonisation: Does the Unanimity Rule Play a Role?
Data
01.01.1997
01.01.1997
Autori
Lisa Grazzini, Tanguy van Ypersele
Publisher
Economy and Society
Economy and Society
Editor
Fausto Panunzi
Fausto Panunzi
In this paper, we analyse tax harmonisation in the framework of two asymmetric countries, differing with respect to their capital-labour endowments. In the first part, we analyse how national fiscal policies are decided when countries play a non-cooperative game. At the Nash equilibrium, inefficiency arises because of the corresponding misallocation of resources. Some forms of fiscal policy co-ordination are then studied within the institutional framework of the European Community, where such policy reforms are decided by the unanimity rule. We show that, while the imposition of a minimum level of capital taxation cannot pass, there exist some forms of tax convergence that can be accepted.