Friday, April 14, 2006

Why tax competition is good for people

This extract from [1] “Is harmonisation of tax policies between different EU countries a good idea?” - Stockholm Network, Kurt Wickman, Gefle College University, March 1999, page 12 - put it brilliantly

“Tax harmonisation addresses mainly one aspect of the entire choice set for EU citizens’ tax planning activities….. The problem is formulated from a government perspective – how to maximize tax revenue when economies integrate. The obvious alternative would be to formulate it from the individual citizen’s perspective: as a safeguard against government tax opportunism. Tax competition has another advantage from the government point of view: it will in a simple way inform governments on the quality of their fiscal policy – whether they are over-taxing people in their jurisdiction or not.”[1]

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