This website will give an insight into the harmonization of taxation in the European Union. After you have read this website you will know, if it positive or negative for Ireland that all EU members have different taxation systems, at the moment.
A significant feature in the development of Europe since the second world war has been the movment towards integration. A milestone in this movement was the signing in 1957 of the treaty establishment, the European Economic Community ( EEC). A new stage in the integration process was reached through the signing of the Treaty on European Union in Mastricht on 7 February 1992. The European union will be one of the most powerful economies in the world.
It is really difficult to integrate so many countries. In some sectors the integration is complete. For example the common currency and the agricultral guidlines. There are some sectors of the economy that are not sufficently harmonised. Tax falls under this category.
Since Ireland joined the EU in 1973, billions of pounds came to Irish agriculture and to the Irish economy through Common Ag Policy (CAP). For Ireland this was a really good thing, that the EU member states had different taxation systems. As a result foreign investments in Ireland is at an all time high and for this reason the Irish economy is booming. Ireland is one of the boom countries in the EU. Compared with Germany, Ireland gains more and more foreign investors at Germany's expense. Last year the Irish taxpayer contributed just over £ 200 million to support Ireland's largest industry which generates almost one-third of our total foreign earnings and supports directly or indirectly 34000 jobs. This proves that it is really good for poor countries to have a low tax rate. When Poland enter the EU, the EU will stop financially supporting Ireland. However by then Ireland will be strong enough to be independent and no longer need transfer funding from the EU. Ireland will be financially stable enough to be a contributing member, instead of a reciving EU member.
As a result of the expanding European economy the economies of non-European countries will be affected. For example America: The americans are constanly investigating the European economy hoping to gain from some of its benefits. Of course they choose a cheap place to invest, in other words a country with low tax rates, Ireland is one of these countries. The tax system of a country is a deciding factor in the competition between the EU countries, because tax is a really important area for companies making direct investments in a foreign country.
The EU will have a harmonised tax system, and as a result some rules apply to the EU member states. For example Value-Added Tax was a really significant point in the EU policy in the area of tax. Every country must now have a value-added-tax and competition is huge regarding the rates of value-added-tax.
The Irish economy profits from different tax rates of coporation tax. As a result of European integration, Ireland's tax may no longer be competitive with other member states. With homogenisation of the tax, Ireland may no longer offer a special incentive to foreign investors. As a result the Irish economy and goverment policy will be badly affected.