Abstract
Indirect tax harmonisation is central to the European Commission's proposals for completion of the internal market by 1993. This paper is concerned with the possibility that such tax coordination might be justified on efficiency grounds as a response to tax-induced trade distortions. Necessary and sufficient conditions characterising welfare-improving multilateral tax reforms are given, and specific forms of harmonisation are shown to be strictly Pareto-improving, without any need for compensation, if the initial situation is one in which protectionist tendencies in domestic taxation are sufficiently pronounced.
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