TAX SYSTEMS AND TAX REFORMS IN EUROPE: RATIONALE AND
OPEN ISSUES OF MORE RADICAL REFORMS
by
Luigi Bernardi
Department of Public and Environmental Economics
University of Pavia - Italy
Abstract
This paper is a part of a wider research on European taxation, carried out in this Department, under the
direction of L. Bernardi and P. Profeta, and the supervision of. V. Tanzi. The paper tries to evaluate
whether recent European tax reforms have really been suitable for to-day fundamental needs of
Europe. Almost all of such reforms have been narrow in size and often conflicting in scope. The re-
sults were therefore not very impressive. Historically diverse, European tax systems did not converge
as it would be required for the efficiency of the single market. Furthermore, a primary weight must be
due to the long lasting decline of European growth rates. A recovery requires (amongst many other
things) for taxation to be substantially reduced on labor and corporations. This is not an easy task. In-
creased fiscal and social fairness could however sustain welfare, by matching growth decrease. Finally
tax reforms should be aware of the incoming European Constitution and EU moves to an increasingly
Federal state. They should therefore copy with a careful reallocation of powers and financing among
the new government tiers. They finally should provide for a basic common level of social protection
within European countries (and those soon join the Union).
JEL Classification numbers : H20, H24, H25
Key words: Taxation, Tax Reforms, European countries
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University of Pavia - February, 2003