Saturday

27th Nov 2021

Opinion

German presidency's broken promises on 'fair tax'

  • German economy minister Peter Altmaier (right) is not only blocking German support for the proposal, but also now apparently refusing to allow it onto the agenda of the council so that other member states can show their support (Photo: consilium.europa.eu)

At the start of the German presidency of the EU Council it committed itself to a "fair taxation" agenda. But as we enter the final leg of its six-month term, time is running out to make good on this promise.

Instead, without a major change of approach, Berlin's legacy will be a catalogue of buck-passing and cancelled meetings.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

After years of deadlock in the Council, there is finally a slim majority in favour of a proposal to introduce public 'Country by Country Reporting' (pCBCR) of Europe's biggest companies.

PCBCR would mean that we would know where corporations book their profits and how much tax they pay on it. It is an essential precursor to more effective corporate taxation and, quite frankly, a no-brainer.

The council's majority support gives the German government a unique opportunity to tackle corporate tax secrecy, and in September centre-left finance minister Olaf Scholz said "We will support any debate and a decision-making process [on pCBCR]".

But an important council working group meeting planned for October which could have discussed pCBCR was cancelled without explanation.

PCBCR is subject to an unseemly internal fight within Germany's coalition government with centre-right economy minister Peter Altmaier not only blocking German support for the proposal, but also now apparently refusing to allow it onto the agenda of the council so that other member states can show their support.

Altmaier seems to be acting in line with industry lobbies which have ludicrously labelled this simple tax transparency proposal as "damaging", "unspeakable", and an "attack on the German economy".

Now more than 220,000 EU citizens who want to stop tax dodging and boost public budgets have signed a petition to demand that the German government puts pCBCR on the council's agenda.

On Thursday (19 November) the competitiveness council will meet and could sign-off on the pCBCR proposal.

But so far the German presidency has ignored the public and supportive member state allies and refused to table it for a vote.

Financial transactions tax

A strikingly similar pattern is seen on another tax-related issue, that of a proposed financial transactions tax (FTT).

"We are also committed to the introduction of a financial transaction tax at European level" declared the German government in its EU presidency programme.

This tiny levy on financial transactions, also called the 'Robin Hood Tax', would be a public policy win-win. It raises much-needed funds for the public purse and could act as a dampener on the most extreme financial speculation.

A group of 10 member states, including Germany, have been in lengthy discussions to implement such a tax among themselves, and it is on the agenda of the EU's ongoing budget negotiations.

But recently the German presidency has cancelled two crucial council meetings that could have been used to signal that this agenda was moving forward.

As MEPs recently wrote, the German government (alongside France) need to "rise to the occasion" and put an ambitious FTT back on the council's agenda.

Delivering the FTT agreement before the end of its presidency is another crucial litmus test for German ministers.

Taxing corporate giants

Tax policy-making at the EU level is complex and European leaders often wait until agreement has been reached at the global level via the OECD, before seeking to implement tax measures across the EU.

In 2018 Germany and a handful of other member states blocked the European Commission's proposal for an EU tax on tech giants such as Facebook and Google. Centre-left German finance minister Olaf Scholz instead preferred an OECD agreement.

But since then, OECD talks have not made substantial progress on a digital levy and the US is using all available tactics to delay progress. Now the commission has signalled it will resurrect the idea of an EU digital tax in 2021.

Scholz is at risk of putting all his eggs in the OECD digital tax basket. The German presidency needs to signal that it will ensure urgent action to deliver an EU tax if OECD talks fail.

Moreover it is not just Big Tech whose tax bills can be suspiciously low, and the OECD has also been discussing global minimum corporate tax standards which would arguably be more effective than a special tax targeting only digital companies.

But again, progress has been slow.

The European Parliament has signalled strong support for similar EU proposals to ensure that major corporations pay their taxes where they earn their profits, in order to substantially reduce profit-shifting and tax avoidance.

Regrettably the German presidency has failed to progress these files.

Time is running out…

Germany's EU presidency has already squandered several opportunities to deliver progressive tax reform.

At a time of huge pressure on public budgets, this is a massive abdication of duty. Apparently the emperor has no clothes. It's not too late for a change of approach, but swift action will be needed.

Meanwhile, the SPD's finance minister Olaf Scholz is left empty-handed – surely not the best launch pad for his campaign to become chancellor in the 2021 federal elections.

Author bio

Vicky Cann is a researcher and campaigner at Corporate Europe Observatory.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

EU Commission: Apple paying so little tax still unfair

The European Commission says it needs more time to study a ruling before it can fully explain why it lost a landmark case against Apple at the General Court of the European Union in Luxembourg.

Firms in EU tax havens cannot be denied Covid bailouts

Denmark, France and Poland are refusing to provide bailouts to companies that are registered in tax havens like Panama. But campaigners point out that the EU's Luxembourg and Netherlands are also home to firms avoiding paying billions into national coffers.

Investigation

Macron's carbon border tax - why hasn't he done anything?

The French president has repeatedly said an EU border tax on carbon emissions is 'crucial'. However, his civil servants have yet to send Brussels a single proposal on how such a levy would work.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

The surprise return of the 'Weimar Triangle'

One little-discussed outcome of Berlin's six-months stint in the EU presidency hot seat is the reactivation of intra-EU consultations among France, Germany... and Poland.

News in Brief

  1. Covid variant: EU to block travel from southern Africa
  2. France and UK seek EU help on Channel migrants
  3. New Swedish PM who resigned after 7 hours gets second chance
  4. Belgium to decide on Friday on Covid measures
  5. UK rings alarm on new Covid strain in South Africa
  6. Turkish police use tear gas at women's rights march
  7. Poland calls for more Nato troops
  8. Ex-Navalny aide leaves Russia

Have the Polish people finally had enough?

Sitting justice minister Zbigniew Ziobro down on the same bench as Congolese warlord Thomas Lubanga or Sudanese dictator Omar al-Bashir might seem like a longshot, if not overkill - but shows just how desperate the Polish people have become.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew report reveals bad environmental habits
  2. Nordic Council of MinistersImproving the integration of young refugees
  3. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  4. Nordic Council of MinistersCan you love whoever you want in care homes?
  5. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  6. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals

Latest News

  1. Belgium goes into three-week 'lockdown light'
  2. MEPs list crimes of 'Kremlin proxy' mercenaries
  3. EU to open up 'black box' of political ads
  4. Can the ECB solve climate change and inflation on its own?
  5. EU set to limit vaccine certificate to nine months
  6. Surprise coalition in Romania without former Renew's Ciolos
  7. This 'Black Friday' is a turning point in corporate accountability
  8. West struggling to show strength on Ukraine

Join EUobserver

Support quality EU news

Join us