No CrossRef data available.
Article contents
The European VAT Oxymoron: A pragmatic solution for welfare, especially in times of crisis?
Published online by Cambridge University Press: 09 March 2020
Abstract
VAT is an important but at the same time long neglected issue in social policy literature. The way in which taxes are levied has important implications for citizens in terms of equity and efficiency effects. Rate diversification is embedded in VAT planning across the EU, which enables Member States to address particular welfare objectives and tackle VAT's regressivity. Nonetheless, for some, this undermines the uniformity and effectiveness of a pan-European VAT system comprised of the so-called ideal single-rate VAT structure which could bring more money into state budgets and, thus, allow for more generous welfare provision. This paper evaluates arguments put forward by both sides, concluding that in times of crisis, where governments might advance VAT streamlining purely in order to deal with deficit constraints instead of fairer redistribution, the regime currently in place is the most pragmatic solution from a pro-welfare perspective.
- Type
- Articles
- Information
- Journal of International and Comparative Social Policy , Volume 32 , Issue 3 , October 2016 , pp. 220 - 234
- Copyright
- Copyright © 2016 Informa UK Limited, trading as Taylor & Francis Group
References
Ahlmark, D. (2003). Cultural VAT on books: An evaluation of the first three years. Stockholm: Swedish Booksellers’ Association and Swedish Publishers’ Association.Google Scholar
Alt, J., Preston, I., & Sibieta, L. (2010). The political economy of tax policy. In Adam, S., Besley, T., Blundell, R., Bond, S., Chote, R., Gammie, M., … Poterba, J. (Eds.), Dimensions of tax design: The mirrlees review (pp. 1204–1279). Oxford: Oxford University Press.Google Scholar
André, M., Bozio, A., Guillot, M., & Paul-Delvaux, P. (2015). French public finances through the financial crisis: It's a long way to recovery. Fiscal Studies, 36(4), 431–452.CrossRefGoogle Scholar
Ballard, C., Scholz, J., & Shoven, J. (1987). The value-added tax: A general equilibrium look at its efficiency and incidence. In Feldstein, M. (Ed.), The effects of taxation on capital formation (pp. 445–474). Chicago, IL: University of Chicago Press.Google Scholar
Bennett, F. (2012). Taxation and welfare. In Alcock, P., May, M., & Wright, S. (Eds.), The student's companion to social policy (pp. 248–254). Chichester: Wiley-Blackwell.Google Scholar
Borowiecki, K., & Navarrete, T. (2015). Fiscal and economic aspects of book consumption in the European Union (ACEI Working Paper No. AWP-02-2015). Oviedo: The Association for Cultural Economics International.CrossRefGoogle Scholar
Brook, A., & Leibfritz, W. (2005). Slovakia's Introduction of a flat tax as part of wider economic reforms (OECD Economics Department Working Papers No. 448). Paris: OECD.Google Scholar
Browne, J., & Levell, P. (2010). The distributional effect of tax and benefit reforms to be introduced between June 2010 and April 2014: A revised assessment (IFS Briefing Note). London: The Institute for Fiscal Studies.Google Scholar
Carbonnier, C. (2005). Is tax shifting asymmetric? Evidence from French VAT reforms, 1995–2000 (PSE Working Papers No. 2005-34). Paris: Paris-Jourdan Sciences Economiques.Google Scholar
Caspersen, E., & Metcalf, G. (1993). Is a value added tax progressive? Annual versus lifetime incidence measures (NBER Working Paper No. 4387). Cambridge, MA: The National Bureau of Economic Research.CrossRefGoogle Scholar
Cnossen, S. (1982). What rate structure for a value-added tax? National Tax Journal, 35(2), 205–214.Google Scholar
Cnossen, S. (1998). Global trends and issues in value added taxation. International Tax and Public Finance, 5, 399–428.CrossRefGoogle Scholar
Confédération Fiscale Européenne (CFE). (2008). CFE opinion statement on the review of existing legislation on VAT reduced rates. Brussels: Author.Google Scholar
Cooper, C., Danson, M., Whittam, G., & Sheridan, T. (2010). The neoliberal project-local taxation intervention in Scotland. The Contours of Critical Accounting, 21(3), 195–210.Google Scholar
Copenhagen Economics. (2007). Study on reduced VAT applied to goods and services in the Member States of the European Union (Final report submitted to European Commission DG TAXUD). Copenhagen: Author.Google Scholar
Crawford, I., Keen, M., & Smith, S. (2010). Value-added tax and excises. In Adam, S., Besley, T., Blundell, R., Bond, S., Chote, R., Gammie, M., … Poterba, J. (Eds.), Dimensions of tax design: The Mirrlees review (pp. 275–362). Oxford: Oxford University Press.Google Scholar
Creedy, J. (2001). Indirect tax reform and the role of exemptions. Fiscal Studies, 22(4), 457–486.CrossRefGoogle Scholar
Creese, A. (2011). Sales taxes on medicines (WHO/HAI Project on Medicine Prices and Availability: Review Series on Pharmaceutical Pricing Policies and Interventions Working Paper No. 5). Geneva: World Health Organization and Health Action International.Google Scholar
DARES. (2006). Les emplois familiaux en 2004: un secteur en forte croissance (DARES Working Paper, No. 19.1). Paris: Ministère de l'emploi, de la cohésion sociale et du lodgement.Google Scholar
De Bens, E., & Oestbye, H. (1998). The European newspaper market. In McQuail, D. & K., Siune (Eds.), Media policy: Convergence, concentration and commerce (pp. 7–22). London: Sage.Google Scholar
Decoster, A., Loughrey, J., O'Donoghue, C., & Verwerft, D. (2009, March). Incidence and welfare effects of indirect taxes. Paper presented at the OECD-University of Maryland Conference: Measuring Poverty, Income Inequality and Social Exclusion: Lessons from Europe. Paris.Google Scholar
De la Feria, R. (2009a). VAT and the EC internal market: The shortcomings of harmonisation (Oxford University Centre for Business Taxation Working Paper No. 09/29). Oxford: Said Business School.Google Scholar
De la Feria, R. (2015). Blueprint for reform of VAT rates in Europe. Intertax, 43(2), 155–172.Google Scholar
De la Feria, R., & Krever, R. (2013). Ending VAT exemptions: Towards a post-modern VAT. In R. de la Feria (Ed.), VAT exemptions. Consequences and design alternatives (pp. 3–36). Alphen aan den Rijn: Kluwer Law International.Google Scholar
Dukelow, F. (2011). Economic crisis and welfare retrenchment: Comparing Irish policy responses in the 1970s and 1980s with the present. Social Policy & Administration, 45, 408–429.CrossRefGoogle Scholar
Enderlein, H., Funke, O., & Lindner, J. (2015). The EU budget: Which fiscal capacity at the European level? In Richardson, J., & Mazey, S. (Eds.), European Union: Power and policy-making (pp. 211–232). Oxford: Routledge.CrossRefGoogle Scholar
European Commission. (2003). Evaluation Report on the Experimental Application of a Reduced Rate of VAT to Certain Labour-intensive Industries (Commission Staff Working Paper). Brussels: Author.Google Scholar
Falkner, G., & Treib, O. (2008). Three Worlds of compliance or four? The EU-15 compared to new member states. Journal of Common Market Studies, 46(2), 293–313.CrossRefGoogle Scholar
Featherstone, K. (2004). The political dynamics of external empowerment: The emergence of EMU and the challenge to the European social model. In Martin, A., & Ross, G. (Eds.), Euros and Europeans: Monetary integration and the European model of society (pp. 226–247). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Greve, B. (2012). Editorial introduction: Overview and conclusion. In Greve, B. (Ed.), The times they are changing: Crisis and the welfare state (pp. 1–6). Chichester: Wiley-Blackwell.Google Scholar
Grown, C., & Valodia, I. (2013). Gender, poverty and taxation: An overview of a multi-country study of gender and taxation. In Leaman, J., & Waris, A. (Eds.), Tax justice and the political economy of global capitalism, 1945 to present (pp. 208–226). New York, NY: Berghann.Google Scholar
Hagen, K. P., Norrman, E., & Sørensen, P. (1998). Financing the Nordic welfare states in an integrating Europe. In Sørensen, P. (Ed.), Tax policy in the Nordic countries (pp. 138–203). Basingstoke: Palgrave Macmillan.CrossRefGoogle Scholar
Harju, J., & Kosonen, T. (2014). The inefficiency of reduced VAT rates: Evidence from restaurant industry (Working Paper). Helsinki: VATT/Government Institute for Economic Research.Google Scholar
Haverland, M. (2000). National adaptation to European integration: The importance of institutional veto points. Journal of Public Policy, 20(1), 83–103.CrossRefGoogle Scholar
Heritier, A., Kerwer, D., Knill, C., Lehmkuhl, D., Teutsch, M., & Douillet, A. C. (2001). Differential Europe: The European Union impact on national policymaking. Lanham, MD: Rowman and Littlefield.Google Scholar
HM Government. (2015). Reviewing post-16 Education and Training Institutions. Part of Further education and training (Report). London: Department for Business, Innovation & Skills and Department of Education.Google Scholar
Institute for Fiscal Studies. (2011). A retrospective evaluation of elements of the EU VAT system (Final Report for the European Commission, TAXUD). London: Author.Google Scholar
International Association of Amusement Parks and Attractions (IAAPA). (2014). A study of the fiscal and employment impacts of lower VAT rates on theme and amusement parks in the European Union (Report, March 2014). Edinburgh: Nevin Associates Ltd.Google Scholar
Irvin, G. (2013). Dismantling Slasher Osborne. In Leaman, J., & Waris, A. (Eds.), Tax justice and the political economy of global capitalism, 1945 to the present (pp. 19–37). New York, NY: Berghahn Books.Google Scholar
Isle of Man Government. (2003). Labour intensive services: evaluation (Report by Isle of Man Government under the labour intensive services (LIS) experiment (Council decision 2000/185/EC). Douglas: IoM Government.Google Scholar
Kato, J. (2003). Regressive taxation and the welfare state. Path dependence and policy diffusion. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Kind, H. J., & Moeen, J. (2015). Effects of taxes and subsidies on media services. In Picard, R. (Ed.), Handbook on the economics of the media (pp. 350–381). Cheltenham: Edward Elgar.Google Scholar
Kitchen, H., & Slack, E. (2006). Providing public services in remote areas. In Bird, R. & Vaillancourt, F. (Eds.), Perspectives on fiscal federalism (pp. 123–140). Washington, DC: World Bank Publications.Google Scholar
Kosonen, T. (2010). What was actually cut in the barbers’ VAT cut? (Working Paper No. 18). Helsinki: VATT/Government Institute for Economic Research.CrossRefGoogle Scholar
Leahy, E., Lyons, S., & Tol, R. S. J. (2011). The distributional effects of value added tax in Ireland. The Economic and Social Review, 42(2), 213–235.Google Scholar
Leibfried, S. (2015). Social policy: Left to the judges and the markets? In Wallace, H., Pollack, M., & Young, A. (Eds.), Policy-Making in the European Union (pp. 253–281). Oxford: Oxford University Press.Google Scholar
Levell, P., Roantree, B., & Shaw, J. (2015). Redistribution from a Lifetime Perspective (IFS Working Paper W15/27). London: Institute for Fiscal Studies.Google Scholar
Leventi, X., Levy, H., Matsaganis, M., Paulus, A., & Sutherland, H. (2010). Modelling the distributional effects of austerity measures: The challenges of a comparative perspective (Research Note No. 9/2010). Vienna: The European Observatory on the Social Situation and Living Conditions.Google Scholar
Liberati, P. (2001). The distributional effects of indirect tax changes in Italy. International Tax and Public Finance, 8, 27–51.CrossRefGoogle Scholar
Mahler, V., & Jesuit, D. (2006). Fiscal redistribution in the developed countries: New insights from the Luxembourg income study. Socio-Economic Review, 4(3), 483–511.CrossRefGoogle Scholar
Nicolai, M. P. (2010). Enquête comparaison spatiale des prix Corse-Continent (Quant'île Paper No. 12). Ajaccio: L'Institut national de la statistique et des études économiques.Google Scholar
O'Connor, B. (2012). Measuring the impact of the jobs initiative: Was the VAT reduction passed on and were jobs created? (Tax Policy Publications Report). Dublin: Department of Finance.Google Scholar
OECD. (2010a). OECD tax policy studies. Taxation, innovation and the environment. Paris: Author.Google Scholar
OECD. (2010b). OECD tax policy studies. Tax policy reform and economic growth. Paris: Author.Google Scholar
OECD. (2010c). OECD tax policy studies. Choosing a broad base – Low rate approach to taxation. Paris: Author.Google Scholar
OECD. (2014). Consumption tax trends 2014. VAT/GST and excise rates, trends and policy issues. Paris: Author.Google Scholar
Orton, M., & Davies, R. (2009). Exploring neglected dimensions of social policy: The SDW, fiscal welfare and the exemplar of local taxation in England. Social Policy and Administration, 43(1), 33–53.CrossRefGoogle Scholar
Owens, J., Battiau, P., & Charlet, A. (2011). VAT's next half century: Towards a single-rate system? OECD Observer, 284. Retrieved from http://www.oecdobserver.org/news/fullstory.php/aid/3509/VAT_s_next_half_century:_Towards_a_single-rate_system_.htmlGoogle Scholar
Ramboll Management Consulting. (2009). Utredning af Den fremtidige offentlige mediestotte. Copenhagen: Author.Google Scholar
Sacchi, S. (2015). Conditionality by other means: EU involvement in Italy's structural reforms in the sovereign debt crisis. Comparative European Politics, 13, 77–92.CrossRefGoogle Scholar
Saluse, J., & Aaviksoo, A. (2008). Impact of taxation policy on pharmaceutical policy (Health Policy Monitor Survey No. 12). Gutersloh: Bertelsmann Stiftung.Google Scholar
Schenk, A., Thuronyi, V., & Cui, W. (2015). Value added tax: A comparative approach. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Seely, A. (2011). VAT on labour-intensive services (Standard Note No. SN1122). London: Library of the House of Commons.Google Scholar
Seely, A. (2013). VAT: European law on VAT rates (Standard Note No. SN2683). London: Library of the House of Commons.Google Scholar
Sinfield, A. (2013). Fiscal welfare. In Greve, B. (Ed.), The Routledge handbook of the welfare state (pp. 400–409). Oxford: Routledge.Google Scholar
Snowdon, C. (2013). Aggressively Regressive. The ‘sin taxes’ that make the poor poorer (IEA Current Controversies Paper No. 47). London: Institute of Economic Affairs.Google Scholar
Sørensen, P. (1997). Public finance solutions to the European unemployment problem? Economic Policy, 12(25), 221–264.CrossRefGoogle Scholar
Stevens, A. (2011). Telling policy stories: An ethnographic study of the Use of evidence in policy-making in the UK. Journal of Social Policy, 40(2), 237–255.CrossRefGoogle Scholar
Sykes, R. (2012). Economic policy and social policy. In Alcock, P., May, M., & Wright, S. (Eds.), The student's companion to social policy (pp. 153–159). Chichester: Wiley-Blackwell.Google Scholar
The tax Strategy Group. (2011). Selected VAT issues (Tax strategy group papers – Budger 2012, TSG 11/15). Dublin, OH: Department of Finance.Google Scholar
Taylor-Gooby, P. (2013). The double crisis of the welfare state and what we can do about it. Basingstoke: Palgrave Pivot.CrossRefGoogle Scholar
Terra, B., & Wattel, P. (2012). European tax law. Alphen aan den Rijn: Kluwer Law International.Google Scholar
Treib, O. (2006). Implementing and complying with EU governance outputs. Living Reviews in European Governance, 1, 1–26.CrossRefGoogle Scholar
Tsebelis, G. (2002). Veto players: How political institutions work. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Tutu, R. (2014). Designing VAT systems for the 21st century: Neutrality. In Spies, K., & Petruzzi, R. (Eds.), Tax policy challenges in the 21st century (pp. 117–138). Vienna: Linde Verlag.Google Scholar
Van der Wurff, R. (2012). The economics of online journalism. In Siapera, E., & Veglis, A. (Eds.), The handbook of global online journalism (pp. 231–249). Hoboken, NJ: John Wiley.CrossRefGoogle Scholar
Van Kersbergen, K., Vis, B., & Hemerijck, A. (2014). The great recession and welfare state reform: Is retrenchment really the only game left in town? Social Policy and Administration, 48(7), 883–904.CrossRefGoogle Scholar
Vermeend, W., van der Ploeg, R., & Timmer, J. W. (2008). Taxes and the economy: A survey on the impact of taxes on growth, employment, investment, consumption and the environment. Cheltenham: Edward Elgar.Google Scholar
Wasserfallen, F. (2014). Political and economic integration in the EU: The case of failed tax harmonization. Journal of Common Market Studies, 52, 420–435.CrossRefGoogle Scholar
Wilensky, H. (1976). The new corporatism, centralization, and the welfare state. London: Sage.Google Scholar