When policy worlds collide: tax competition, State aid and regional economic development in the EU

Research output: Contribution to journalArticle

Abstract

This paper explores the relationship between tax competition, regional development and State aid control. In the 1990s, ‘unfair’ tax competition rose up the policy agenda with EU and OECD initiatives leading to the amendment of various tax measures sometimes, paradoxically, enhancing their attractiveness. In parallel, the European Commission pursued an increasingly rigorous approach to disciplining regional aid - even in the most disadvantaged regions. Meanwhile, the European Court of Justice addressed the longstanding question of whether corporate tax rates set by regional authorities involve State aid. The consequence of these policy outcomes is that national governments and ‘genuinely’ autonomous regional authorities may operate more generous tax measures than those authorised under the State aid rules in the most severely disadvantaged regions. This raises important issues for EU Cohesion policy and small island economies, as well as for the relationship between EU Competition policy and taxation.
LanguageEnglish
Pages585-602
Number of pages18
JournalJournal of European Integration
Volume34
Issue number6
DOIs
Publication statusPublished - 3 Aug 2012

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taxes
EU
regional authority
economics
corporate tax
competition policy
European Court of Justice
European Commission
social attraction
taxation
group cohesion
regional development
OECD
amendment
economy

Keywords

  • state aid
  • tax competition
  • regional development
  • outermost regions

Cite this

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abstract = "This paper explores the relationship between tax competition, regional development and State aid control. In the 1990s, ‘unfair’ tax competition rose up the policy agenda with EU and OECD initiatives leading to the amendment of various tax measures sometimes, paradoxically, enhancing their attractiveness. In parallel, the European Commission pursued an increasingly rigorous approach to disciplining regional aid - even in the most disadvantaged regions. Meanwhile, the European Court of Justice addressed the longstanding question of whether corporate tax rates set by regional authorities involve State aid. The consequence of these policy outcomes is that national governments and ‘genuinely’ autonomous regional authorities may operate more generous tax measures than those authorised under the State aid rules in the most severely disadvantaged regions. This raises important issues for EU Cohesion policy and small island economies, as well as for the relationship between EU Competition policy and taxation.",
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When policy worlds collide : tax competition, State aid and regional economic development in the EU. / Wishlade, Fiona.

In: Journal of European Integration, Vol. 34, No. 6, 03.08.2012, p. 585-602.

Research output: Contribution to journalArticle

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