Part 1 - AL-Tax

International Taxation Handbook43.53EU-15EU-25% of GDP2.521.5EU-25 (gdp-weighted)NMS-1010.501995 1996 1997 1998 1999 2000 2001 2002 2003 2004EU-25 (weighted average)EU-25 (arithmetic average)EU-15 (weighted average)EU-15 (arithmetic average)NMS-10 (weighted average)NMS-10 (arithmetic average)Figure 8.3 Taxes on incomes of corporations as percentage of GDP (1995–2004).Source: Structures of Taxation Systems. DG TAXUDharmonization of the tax burden. We are therefore left with the finding alreadymade by Slemrod (2004) of a negative association between measures of opennessand statutory rates, but not revenues collected. This is apparent from the evolutionof corporate tax collected on GDP, which is relatively stable at around 3%. Itmay reflect the fact that tax competition decreases the rate of taxation per unit ofinvestment, but also allows countries to attract a large corporate tax base (Lassenand Sørensen, 2002). It certainly also reflects a general trend towards lower statutoryrates – a trend currently also noticeable in personal income taxes – but counterbalancedby a widening of corporate tax bases. 9 There is in fact no obviousrelationship between the cuts in corporate statutory tax rates between 1995 and2004, and the evolution of revenues collected from this tax. Figure 8.4 indeedsuggests that – broadly speaking – the new Member States that have cut theirrates have lost corporate tax revenues as a percentage of GDP, while most EU-15countries that have done likewise have seen their revenue grow.To conclude, both the theoretical and the empirical literature are rather inconclusiveon the effects and the extent of corporate tax competition in the European186