Part 1 - AL-Tax

International Taxation Handbookof a monetary union. Two Council resolutions followed in 1971 and 1972 whichagreed that it was necessary to proceed with fiscal harmonization. Driven by thismomentum, the European Commission proposed in 1975 to harmonize the corporatetax rates between 45% and 55% (Radaelli and Kraemer, 2005). 11 Interestingly,this proposal was challenged in 1979 by the European Parliament, whose agenda(as set out in the Nyborg Report) was to harmonize tax bases before tax rates.Measures to do just that were incorporated in a 1988 proposal by the EuropeanCommission but, because of the strong opposition of some Member States, it wasnever formally sent to the Council. According to Radaelli (1997), the harmonizationof corporate taxation in Europe slowed down from 1989, when CommissionerChristiane Scrivener took the taxation portfolio, as she preferred to focus on fightingdouble taxation – notably in cross-border operations of companies and in taxationof savings – and stressed the need for subsidiarity. The 1975 proposal was withdrawnin 1990. The next step took place in 1992, when another committee, this timechaired by Onno Ruding, was given a mandate to look at whether differences incorporate taxes distorted investment decisions. The committee proposed someminimum standards in corporate tax bases and a band for tax rates of between30% and 40% (Ruding Report, 1992). However, once again, this proposal was alsonot translated into political action.During all these years, the European Commission was battling on two fronts(Radaelli and Kraemer, 2005). First, it had to solve the problem of tax evasion, notonly to low-tax third countries, but also and foremost within the European Union,where savings of nonresident European were generally untaxed. Second, it had toovercome the problem of tax obstacles to the Single Market. These concerns ledto proposals on the taxation of savings and on the taxation of various cross-borderoperations.8.7 The corporate taxation debate in the EuropeanUnion: The 2001 CommunicationThe prospects for more coordination in corporate taxation were revived in 2001,when the European Commission issued a communication on company taxationin the Single Market (European Commission, 2001a). The communication wasaccompanied by a study on the level, dispersion, and determinants of corporateeffective tax rates in the EU-15, and itself made concrete policy proposals basedon the identification of a series of tax obstacles to the completion of the SingleMarket, the presence of excessive tax administrative costs, double-taxation188