Economic Integration and Tax Coordination in Regional Economic Communities

Abstract

Chapter 8 reviews the various stages of economic integration that can be distinguished and discusses VAT (and excise tax) coordination in the presence and absence of border controls. All African countries belong to a regional economic community (REC), and often to more than one. The countries are closely monitoring the remarkable combination of free politics and free economics achieved by the common market (now the single market) of the member states of the EU. Free trade and free competition raise the standards of living in participating member countries. In this setting, tax coordination should ensure that equal conditions for competitors are not distorted by discriminatory tax systems—a criterion that is referred to as tax neutrality. At the same time, however, the participating countries should retain as much tax autonomy as possible in order to be able to pursue their own social and economic policy goals.