Soft Law and Taxation: EU and International Aspects
Legisprudence, Volume 2, Number 2, 2008
52 Pages Posted: 4 Jun 2014
Date Written: September 18, 2008
The EU increasingly uses diversified (new) governance mechanisms in order to improve its performance and legitimacy. In tax matters, various kinds of soft law are used, in indirect as well as in direct taxation. One such instrument, the Code of Conduct for Business Taxation, is deployed to tackle harmful tax competition with respect to direct taxation. Though legally non-binding but relying on peer pressure for its effectiveness, the Code of Conduct is generally regarded to be quite an effective political instrument. There is a subtle interplay between the Code of Conduct and existing hard law in the EU, the State aid provisions providing an important stick, and also between the Code and OECD’s soft law instruments. Though the Code’s effectiveness is limited, producing negative integration only, it still is significant in facilitating an ongoing dialogue on harmful tax competition between the Member States. However, the Code of Conduct does not score well in terms of stakeholders involvement. The Member States are involved, not civil society. More inclusive and transparent public participation and consultation may enhance the responsiveness and legitimacy of EU tax coordination.
Keywords: Taxation, soft law, Code of Conduct for Business Taxation, EU market integration, harmful tax competition, new governance, legitimacy, communicative regulation, public consultation and participation, transparency.
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