| On 1 December 1997, the Ecofin Ministers agreed on a Code of conduct for business taxation, included on a Tax package to tackle harmful tax competition, as a result of the new comprehensive approach to tax issues adopted in Verona (Italy) in April 1996. This thesis focuses on the analysis of the Code of Conduct as a tax coordination proposal based on tax diversity within the European Community. Coordination is meant to be a political device based on two fundamental principles. The first one, tax neutrality in the internal market eliminating harmful tax practices that create distortions in location decisions of business activity. Economic analysis developed to assess the impact of tax measures in the cost of capital and the trend of foreign direct investments---inflows and outflows---show a positive correlation, though not homogenous through the single market. Second, but not least, Member States ability to set national tax policies to achieve domestic targets as guaranteed by the subsidiarity principle. The aim is to enhance the workable competition in the internal market, without alignment of business taxation while balancing these European (tax neutrality) and national (tax subsidiarity) confronting goals. A successful approach might be the feature of tax coordination as an economic regulatory policy at the European level. On this basis, tax coordination might be a powerful tool to improve business environment in the European Community provided it is founded on the so-called "neutrality, subsidiarity and competitiveness" paradigm. |
