II. Tax Policy in The European Union
II. Tax Policy in The European Union

Author(s): Éva Erdős
Subject(s): EU-Approach / EU-Accession / EU-Development, Public Finances
Published by: Publishing Inc. European Readings & Prodifmultimedia/Editura Napoca Star
Keywords: VAT;
Summary/Abstract: Taxation is central to national sovereignty, for without revenue governments cannot conduct policy. It is an instrument of economic regulation which can be used to influence consumption, encourage saving or shape the way in which companies are organised. Tax policy is essential to all Member States, and a country’s actions can have an impact not only at home but also in neighbouring countries. In the European Unions single market, Member States need to work together and not strike out in different directions on tax policy. In order to establish the internal market, the system of consumption taxes had to be as neutral as possible. Where tax rebates on exports of goods from one Member State to another were higher than the amounts actually paid they acted as export subsidies. For that reason the Community adopted the value added tax (VAT), although at the time it was introduced Member States were allowed to set their own rates.

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