Part 1 - AL-Tax

Chapter 8Relative CIT rate change 1995–2004 (in %)20100−10−20−30−40−50−60−70−70−60SK−50EELUITPL−40−30−20−10UKCZCYLV0NLSEDK HUDE10PT20FRGRE3040SEFIAT MTLT50607080ES90100Relative change in CIT collected on GDP 1995–2004 (in %)Sl: no change in CIT rate but a 23.3% increase in revenuesFigure 8.4 Evolution of corporate tax rates and revenue as percentage of GDP (1995–2004).Source: European Commission and own calculationsUnion. This ambiguity has of course translated into the political debate and isreflected in the tax proposals made by the European Commission.8.6 The corporate taxation debate in the EuropeanUnion: The early proposalsThe debate over EU corporate tax harmonization is not new. One should keep inmind that a similar debate was previously held on taxation of capital (interestand dividend payments) with parallel arguments and that the first formal proposalsto harmonize or coordinate corporate tax systems in Europe date from as far backas the early 1960s, when the fiscal and financial committee set up by the Commissionand chaired by Professor Fritz Neumark proposed in July 1962 – after two yearsof work – to gradually harmonize tax systems in Europe, starting with turnovertaxes and then doing the same with direct taxes with a split-rate system. However,the proposal was not followed by policy action. In 1970, another committeechaired by Professor Van den Tempel analyzed the various tax systems in placein the Member States and recommended that all adopt the classical system. 10 Thisproposal came shortly after the Werner Report on economic and monetary unionin Europe, which stressed that tax harmonization should accompany the creation187