Excise Tax Harmonization in the EU
Excise Tax Harmonization in the EU

Author(s): Taťána Hajdíková, Karel Janák, Olga Oberreiterová
Subject(s): Economic policy, EU-Accession / EU-DEvelopment, Fiscal Politics / Budgeting
Published by: Masarykova univerzita nakladatelství
Keywords: fiscal benefits; harmonization; excise duty; tax rate;
Summary/Abstract: Excise taxes are a constant part of state budget revenue. They represent a stable income that governments can influence by raising the tax rate. Despite the fact that excise duties are mainly burdened with products that negatively affect our health and the environment, governments must increase their tax burden with caution. For most of these products it is not possible to find suitable substitutes and therefore the elasticity of demand is very small. The application of a change in the rate of excise duties can significantly affect the overall impact of taxes on taxpayers and the distribution of income in a company of a particular state. In trade between states, different procedures can be used to include or exclude excise duties on the prices of taxed products and tax competition between states can occur. The paper comments on its findings from the unfulfilled partial objective of excise tax harmonization, which consists in unifying the rate for individual selected products. The main reason for this failure is the collection of excise duty in the state where the selected product is put into circulation. Thus, the choice of excise duty remains the responsibility of national governments. States are also influenced by the historical development of the country in the rate setting, where certain types of alcoholic and tobacco products may be preferred. Yet harmonization in this tax area is successful in unifying the structure of selective taxes. A comparison of the taxation of individual groups of alcoholic beverages in selected European Union countries shows that these countries comply with the prescribed minimum rates for these selected products.

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