10 - Indirect Taxation

Summary

While competition policy has been described as the first supranational policy, taxation is conventionally presented at the other end of the spectrum, as the policy area “most resistant to moves to shift the locus of power to the supranational level.” A commitment to tax harmonization as part of European integration therefore represents a clear assault on national sovereignty: Tax harmonization raises key issues about European integration and has been a recurring topic of debate and disagreement throughout the history of European integration. Yet, to date, tax issues have received very limited coverage in historical accounts of European integration. Taxation is also a crucial element of the business environment and one to which firms respond through their corporate strategy and through political lobbying. Typically business has called for a shift in the tax burden from direct to indirect taxation. This is underpinned by a belief that levels of taxation and the balance between direct and indirect taxation have important effects on economic performance. It is unsurprising, therefore, that faced with evidence of declining competitiveness British business should turn to taxation as a perceived cause of this problem. Again, however, despite being “the most prevalent form of intervention in the free production and sale of goods and services” business historians have neglected the topic. Indeed, it is only recently that any sort of mainstream history of taxation has started to emerge. Perhaps one reason for this is the complexity of the subject and the importance of detail.