Thursday, March 21, 2019
Lily Faulhaber (Georgetown) presents Competing Over Competition: Who Decides What Tax Practices Are Harmful? at Indiana today as part of its Tax Policy Colloquium Series hosted by David Gamage:
In 1998, the European Union and the Organisation for Economic Cooperation and Development both established bodies intended to curtail harmful tax competition. This Article argues that the past twenty years have shown the challenges inherent in having two separate international bodies working separately on the same project.
This Article outlines the work of both bodies in order to identify the differences between them. These differences include differences in membership, differences in the ways the bodies define harmful tax competition, and differences in the scope of their work, all of which can lead to different outcomes. Concerns about these different outcomes can in turn lead to one body setting the agenda or timetable for the other, despite their different members and concerns.
In an earlier article, I identified the “Luxembourg effect,” by which the involvement of EU Member States in international organizations can leads to the recommendations of these organizations being constrained by EU law, even when many of the organizations’ members are not EU Member States. This Article illustrates a different effect, where EU institutions are shaping the agendas of other organizations and undermining what is being done at an international level.
This Article concludes that the differences
between the EU and OECD bodies in the fight against tax competition has
led to uncertainty about what constitutes harmful tax competition. While
this uncertainty could be seen as a positive development in the fight over tax
competition because it may lead countries to be more conservative in their
design of tax measures, it raises broader concerns for other areas where
EU bodies and other international bodies are also working separately on
the same project. Examples of such areas include digital taxation and antiavoidance
rules, as well as many areas outside of international tax.