Abstract
Professor Dagan structured her Montesquieu lecture in three parts. First, she explained that substantive tax sovereignty consists of the state power to raise taxes and distribute justly the revenues as part of a ‘social contract’ with its constituents. Secondly, she unraveled the ongoing challenges for states to maintain viable and legitimate tax systems in a competitive global environment that puts pressure on government revenues, and thus on spending on public goods and services. Third, she argued that international tax cooperation is only legitimate to curb said challenges if the substantial tax sovereignty of weaker states is also adequately served. My comments focus on the second part of the lecture, namely, where Dagan addresses the tendency to offer economically attractive mobile (future) citizens tax benefits which may go against the interests of non-mobile citizens to maintain the welfare state. I look at how this issue plays a role in the context of the European Union, with its internal market based on free movement rights, fueling competition among EU states for mobile factors, among which – increasingly mobile – residents.