Part 1 - AL-Tax

International Taxation Handbook●●these areas. The unanimity in the Council on fiscal issues required by thearticle, however, makes it difficult to reach a compromise and slows downthe process of removing tax distortions. It has, however, served as the basisfor proposals such as those to coordinate corporate taxation.Multilateral surveillance role of the European Commission. Article 99 ECassigns the European Commission the role of conducting multilateral surveillance.The Broad Economic Policy Guidelines and the Employment Guidelinesare typical examples of this task. However, both sets of guidelines have sofar been relatively shy when it comes to discussing taxation issues.Targeted actions. Finally, Articles 136 and 137 EC assign the EuropeanCommission the role of supporting and complementing the actions of theMember States in various domains, such as social protection and the environment.Taxation may be used as a tool to achieve those aims.In consequence of these strictly delimited competences, European tax legislationhas been – mainly – limited to the harmonization of the value-added tax base(one of the main resources for the European budget), the exemption or taxation ata low level of new capital raised by companies (Directive 69/335/EEC), issues ofmutual assistance between tax administrations (Directive 77/799/EEC), severalad hoc pieces of legislation in the areas of taxation of savings and tax obstacles tothe Single Market (see below), and multilateral surveillance.8.4 The evolution of tax receipts in theEuropean UnionAggregated at the EU level, total taxes collected today represent just under 40%of GDP (compared to just under 30% for the USA and Japan). The total tax burdengradually increased between 1970 and the end of the century, probably reflectingboth the need to collect revenues to finance increasingly desired public policiesand the post-oil-shock adverse economic situation (Figure 8.1).Since the end of the 1990s, we observe an unprecedented several-year decreaseof the total tax burden, which seems to have leveled off in the last three years.This of course hides a considerable diversity in levels and trends across MemberStates, as well as the influence of the economic cycle. There is also no indicationthat total tax burdens are converging within the European Union. Changes in thetax-to-GDP ratios of individual countries in fact reveal that most changes – eitherincreases or decreases – have occurred in countries with a below-average total taxburden.178