Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 90
The Commission of the European Communities has proposed to replace current border tax adjustments at the interaal borders of EC member countries by a set of three distinct measures that comprise an international tax-on-tax deduction of the value-added tax, the harmonization of current value-added and excise tax rates and a Clearing mechanism that serves to maintain the current distribution of tax receipts among member countries. The revised proposals of May 1989 are presented in the light of both the current Situation and the original approach adopted by the Commission in its 1985 White Paper. The proposals are then discussed individually and compared to competing approaches put forward by the British Secretary of the Treasury, Nigel Lawson, and The Kiel Institute of World Economics. The conclusion is reached that the Commission should be followed in two points, the tax-on-tax deduction and the Clearing mechanism. What concerns tax rate harmonization, it is argued that excise taxes should be harmonized to some extent while the harmonization of current value-added tax rates can be left to market forces.