| dc.description.abstract | This Dissertation focuses on the problem of tax law (and policy) harmonization in the
East African Community.
We set out to prove that it is difficult to bargain for tax law and policy harmonization in
the context of regional integration and EAC co-operation in particular.
This Dissertation starts by providing a general historical background of East African
Cooperation from pre-independence period, outlining reasons for past failures, to the time
when the new East African Community Customs Union comes into existence. The
dissertation offers a different dimension to the existent explanations as to why the 1967
East African Community did not survive and argues that polarized developmental visions
of the three East African countries were partly to blame for unsuccessful integration
experience. The paper goes further to explore the new circumstances under which current
cooperation efforts are being conducted and emphasize the instrumental role of taxation
in the process of regional integration in terms of facilitating the achievement of EAC CU
goals and objectives. The study identifies challenges, benefits and implications of the
EAC Customs Union but at the same time pinpoints that without tax law and policy
harmonization meaningful economic integration is not viable.
We observe that economic regional integration with the attendant consequences such as
revenue losses, trade and financial liberalization has had an impact on taxation systems of
the integrating countries producing a number of departures in municipal tax laws, which
have not been synchronized despite years of cooperation. It is with this observation in
mind that the paper appraises the process of tax harmonization and illustrates on the
example of property taxation the disparities present in the municipal tax laws of three
countries and the difficulties involved in harmonizing them.
The dissertation finds that due to the diversity of the opinions that exist on the type of tax
harmonization, method of determination of appropriate rates and tax bases as well as
relatively low cost of maintaining the status quo harmonization of tax law is difficult to
achieve. Other factors that complicate successful bargaining on common taxation law and policy in EAC are issues of state sovereignty, diversity of jurisdictional interests and
preferences, countries' divergent and at time conflicting obligations under various
regional arrangements as well as institutional framework of EAC, among other reasons.
An overview of European Union experience with tax law and policy harmonization is
offered so as to gain insights into the dynamics of the process and borrow some of the
time-tested approaches.
Despite our finding that harmonization of tax law (and policy) in the context of EAC
regional integration is an arena where change is slow as governments do not want to take
risks with policy and promulgate laws that might change or influence their political,
economic or social positions, we are of the opinion that on the balance, tax harmonization
under EAC integration is viable but the political, social and economic challenges
elaborated in this study have to be addressed | en |
