Tuesday

10th Dec 2019

Public shaming could help EU to pass tax laws

  • Mario Monti with European Commission president Jean-Claude Juncker (Photo: European People's Party - EPP)

Member states can be made to move on issues of common tax policy through a combination of political deftness and public shaming, says a former EU tax commissioner.

Italian senator Mario Monti, the commissioner responsible for tax issues in the late 1990s, on Monday (1 June) advised members of a special European Parliament committee looking into tax breaks for multinationals that those hoping for more EU tax policies need to use "reassurance" and "embarrassment".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

  • Tax issues continue to be bound by unanimity rules, meaning all member states have to agree. (Photo: The Council of the European Union)

Looking back to 1995, when the commission started in earnest to think about how to tackle tax issues - where member states have a veto right - he said: "We dropped the flag of harmonisations and we raised the more modest flag of co-ordination. Semantics- maybe. But much less threatening. Much more reassuring."

And to prevent finance ministers from wielding their vetos "we put into place the embarrassment part of the strategy".

Monti noted that, at that time, youth unemployment was also a problem yet countries had tax regimes in place that were more favourable to corporations rather than helping the labour market.

"Finance ministers could not carry on saying that they were fighting unemployment and yet refuse to tackle the issue of tax co-ordination," he noted.

Monti also noted that policy-makers tend to fixate on a country's "red lines", but that they apparently immoveable positions are always open to negotiation.

Illustrating how the dynamics in a group change, he said that Belgium in the late 1990s wanted to introduce a savings tax directive because it "hated the notion" that Belgian wealthy people put their savings in Luxembourg.

The Grand Duchy, for its part, was "complaining loudly" about Belgium giving tax breaks to multinationals.

In 1997, EU states agreed a tax package that included going towards a savings tax bill; a bill on taxation of interest; and the beginning of co-ordination of corporate tax.

This kind of package meant "you may attract apparently ‘unattractable’ countries," said Monti, referring to Belgium and Luxembourg.

He called the package the “building block” for the subsequent developments in tax co-ordination.

LuxLeaks

Tax has moved back onto the political agenda again following revelations last year about how tax schemes in Luxembourg allow hundreds of multi-nationals to pay almost no taxes - money that would have otherwise gone into government coffers.

The revelations were made more explosive by the fact that governments across Europe have been slashing public spending to cut debt levels.

The European Commission responded by opening an investigation into whether these and similar set-ups in other member states breached state aid rules.

It is also bringing forward a law on the automatic exchange of information on these so-called 'tax rulings' and is relaunching a previously moribund law on creating a common corporate tax base.

But tax issues - as in the 1990s - continue to be bound by unanimity rules, meaning all member states have to agree.

However, Monti indicated that the circumstances today - including anger over multinationals avoiding tax - could lead to another breakthrough in tax issues, this time toward the EU raising its own taxes.

"I believe the synergies intellectually, technically, politically between the handling of national taxation policies, the extent of their coordination and the future of the shape of the EU budget will also be a promising subject," he said.

Monti is chairing a group looking into EU tax-raising powers (also known as 'own resources') which is due come with a final report next year.

EU considering mandatory corporate tax base

The European Commission has said it will reintroduce a previously shelved plan for a common corporate tax system in a bid to clamp down on tax avoidance by multinationals

EU in new push for common corporate tax base

The European Commission Wednesday announced plans meant to put an end to secretive 'sweetheart' tax deals for multinationals and nudge member states towards common corporate tax rules.

Zahradil 'conflict of interest' probe may flounder

The European Parliament's internal body, designed to sanction MEPs for conflicts of interests, has failed to deliver any meaningful verdicts. Some are hoping a future proposal for a new independent ethics body will help hold MEPs accountable.

Exclusive

Zahradil 'conflict of interest' over EU-Vietnam trade deal

Right-wing Czech MEP Jan Zahradil is leading European Parliament negotiations on a trade deal with Vietnam. As rapporteur, he is supposed to be neutral but has neglected to declare his involvement in a group with ties to the Communist party.

News in Brief

  1. Orban wants bill to tighten grip over theatres
  2. Dutch reduce terror threat level for first time since 2013
  3. Russia banned from Olympics over doping scandal
  4. EU agrees future human rights sanctions
  5. Greens demand Zahradil conflict of interest probe
  6. EU commission to 'correct mistake' on enlargement
  7. Luxembourg pushes EU to recognise Palestine
  8. Minister: 'All Brussels kids should be trilingual at 18'

This is the (finally) approved European Commission

MEPs gave the green light to the entire new European Commission during the plenary session in Strasbourg - but with the abstention of the Greens and a rejection by the leftist group GUE/NGL.

Magazine

Welcome to the EU engine room

Welcome to the EU engine room: the European Parliament (EP's) 22 committees, which churn out hundreds of new laws and non-binding reports each year and which keep an eye on other European institutions.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us