Vierteljahrshefte zur Wirtschaftsforschung 1 / 1971, S. 43-52
The development of the EEC toward economic and currency union must include a higher degree of harmonization of government transactions. Conflicts can arise with regard to the shaping of government transactions when differing goals are pursued. Realization of one of the goals, the equalization of terms of competition, requires the elimination of government transactions' distortive effects on competition between the countries and regions of the EEC. To be sure, cost differentials owing to location should remain, in the interest of a better international and interregional division of labor - one assumed objective of establishment of a common market. On the other hand; attainment of another goal, namely that of well-balanced economic development, presumes an adjustment of productivity levels in the countries and regions of the EEC. This means that location costs differentials must also be reduced by way of government transactions. Simultaneous pursuance of both goals places the less advanced countries in particular before a difficult task in the structuring of their taxation and expenditure systems. A simple conformation of fiscal structure is not possible and not even desirable. The question is thus raised, which differences should these structures retain to afford the greatest compatibility to the common goals of the EEC. The only solution to the conflict of goals is provided by a system of international financial transfers built upon regional criteria applied uniformly in each country.