Storming Another Barrier

In another bold and broad step toward unifying continental Europe's major economies, the Common Market Commission proposed last week that its six member nations scrap their jumble of business "turnover" taxes and adopt a single, coherent tax code.

All of the countries but France now levy a mind-boggling variety of taxes against their own manufactured goods every time they change hands in the production process. This works much in the favor of big, integrated companies, which handle everything from extracting the raw materials to making the final sale and are thus taxed only once. The turnover taxes also impede trade among the six Common Market members in a peculiar way. Each country grants its exporters a subsidy that is supposed to equal the turnover tax but is often higher: to make up for this, the Common Market permits its members to impose consumer taxes on imports. The end effect is to artificially pump up the price of imports.

Now the Common Market Commission wants all members to do it the French way. The French system does away with double and triple taxation by permitting manufacturer to deduct from his tax bill those taxes already levied on the materials he buys. Each finished product is effectively taxed only on its final value at rates ranging from 6% to 25%. If every body followed this system, there would be less excuse for fat export subsidies.

To smooth the way for its bold recommendation, the Common Market Commission proposes that changes come gradually. But the informed betting in Brussels is that the Common Market will make the first steps toward a unified business tax structure within the next year.

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