Les pièges d’une assiette commune européenne sur l’impôt des sociétés [en] 

Ever since 2001, when the Commission launched its corporate tax strategy, it has been striving to cut tax barriers within the Single Market. This includes the Common Consolidated Corporate Tax Base Working Group in 2004 and a push for greater coordination between member states' tax systems in 2006. Germany backed the Commission on this during its presidency in 2007, envisaging the legislative proposal for such a move to be presented in late 2008, say the authors. 

However, there is considerable opposition to this harmonisation of the tax base, believe Dullien and Schwarzer, explaining that Ireland, Cyprus, Estonia, Lithuania, Latvia, Slovakia and the UK would be against this move. Additionally, the chances of the tax base harmonisation being adopted are slim due to the need for unanimity, claim the authors. One of the reasons why the Commission has delayed the proposal is because of fears it would sway the Irish referendum on the EU Reform Treaty, they reveal. 

Dullien and Schwarzer argue that harmonising the corporate tax base will not necessarily lead to harmonised tax rates or the development of an EU-wide corporate tax. On the plus side, harmonisation should be welcomed, suggest the authors, because it would ease problems of insufficiently integrated markets and reduce compliance costs for companies. 

But on the other hand, argue the authors, it would lead to increased tax competition and prevent the use of temporarily depreciating allowances during an economic slump to increase investment – used effectively by Merkel in Germany during 2006/07 and by Bush in the US in 2004. 

In their conclusion, the authors claim that whatever the arguments for the common tax base, they will never convince all EU member states to join, as smaller countries in particular will want to keep their national prerogatives in this area for reasons of sovereignty and competition. 

The EU should therefore "give up the ambition to have a harmonised tax base" immediately, say the authors, and instead push for enhanced cooperation in this area led by the EMU member states (but excluding Ireland).