ABSTRACT
Fiscal integration reflects the role of community public finance and its budget in arrangements for international economic integration. The integration of fiscal functions at community level results in some degree of fiscal union, a situation in which the choice of policy targets and the administration of policy instruments in relation to expenditure and taxation are, within its domain, a matter for the community’s authority. Fiscal integration in this sense is to be distinguished both from fiscal harmonization, which refers to agreement on the manner in which each member state will utilize a particular fiscal instrument over which it retains control, and from fiscal co-ordination, which refers to essentially voluntary alignments of national fiscal measures which cannot be enforced by the community authority. This chapter deals mainly with fiscal integration. The central issues that arise in fiscal harmonization are discussed in Chapter 8. Factors that affect the rational choice among integration, harmonization and co-ordination in the fiscal field are alluded to throughout these two chapters.
