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commission on fiscal imbalance 合集

Is the solution to fall into line with the rules

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Unformatted text preview: e any impact on trade between persons liable for tax for whom the principle of taxation at the rate of the place of destination would undoubtedly apply as it does in respect of trade between entities of different member states of the European Union. The foregoing paragraph raises two, more general questions concerning tax competition between jurisdictions and the place of taxation. a) Tax competition between jurisdictions: personal income tax and corporation tax The limited mobility of residents between the Walloon and Flemish Regions means that the autonomy in respect of margins of these Regions with regard to personal income tax generates little tax competition, thus dissipating any fear of the harmful consequences of recent agreements in this respect. However, mobility is much greater between Brussels and its Flemish periphery26 (see Table 2, which indicates that Brussels accounts for 14.5% of GDP but only for 8.6% of the tax base, those figures reflect at once the delocalization of wealthy inhabitants of Brussels toward the periphery of the city located in Flemish territory, and the phenomenon of commuters). In this instance, the risk of tax competition is serious. It demands a solution, without which the financial paralysis of the Brussels-Capital Region is to be feared. The mobility of economic activity also causes hesitation with respect to the introduction of an autonomy in respect of margins regarding corporation tax. At present, the Regions may grant direct assistance to investment, for example, through capital premiums, provided that this is acceptable to European authorities, but not tax assistance such as investment tax credits. This means that fiscal autonomy is non-existent from the standpoint of the nominal taxation of companies but not as regards the effective taxation of companies, which in turn demands deciding how to apportion among Belgium’s Regions the taxable income of a company that has establishments in more than one Region. Is the solution to “fall into line with the rules recommended by the OECD in respect of international fiscal conventions and with the practices of big federal countries, and recognize permanent regional establishments of Belgian companies and levy corporation taxes at the geographic level?” (Gérard 1999, translated). Moreover, problems concerning transfer prices would inevitably arise. At a time when the European Union is examining corporate taxation, with particular emphasis on obstacles to convergence in this respect, Plasschaert (1999) maintains that fiscal autonomy in this field would be rather inefficient. b) Place of taxation and the situation of the Brussels-Capital Region Charles, Deschamps and Weickmans (1998), quoted by Gérard (1999), have questioned the effect on the financing of the Regions of the charging of personal income tax at the place of work instead of the place of residence. “This is not a purely hypothetical change but a realistic hypothesis from the standpoint of broader fiscal autonomy for the Regions, thus bringing into line Belgian interregiona...
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