The paper discusses the main arguments for destination- versus origin-based commodity taxation in the European Community's Internal Market. Destination-based solutions distort commodity trade in the Community because cross-border purchases by final consumers can only be taxed in the origin country. On the other hand, an origin-based general consumption tax is neutral in a European context and it can be combined with destination-based taxation in third countries in a non-distortionary way. Furthermore, it is shown that the introduction of capital mobility does not affect the neutrality of an origin-based consumption tax. Finally, the paper addresses the administrative and political implications of a switch to the origin principle in the European Community