ABSTRACT
Of all the areas of policy that will impact upon the development of the European business environment, there is perhaps no more controversial topic than taxation. The means and method of taxation go to the very heart of national sovereignty, helping to explain why agreement on removal of this source of EU market and trade distortion has proved so difficult to achieve. Yet the twin forces of regional integration and globalisation imply development of a more harmonious tax system that removes commercial distortions. Initially, this chapter seeks to examine the economic importance of taxation as a determinant of economic performance. Thereafter the issue of harmonisation is explored, highlighting policy efforts within the context of the SEM directed at the process, rationale and impediments to greater approximation. The chapter also addresses the issue of harmonisation on a global level and the factors that will drive and feasibly influence future tax trends and their impact upon the European business environment. Finally, broader aspects of taxation are explored, notably within the context of the moves towards EMU and of the need to build a fiscal system that aids the development of a competitive economy.
