Thursday

28th Mar 2024

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

Get the EU news that really matters

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.

Why UK-EU defence and security deal may be difficult

Rather than assuming a pro-European Labour government in London will automatically open doors in Brussels, the Labour party needs to consider what it may be able to offer to incentivise EU leaders to factor the UK into their defence thinking.

Column

EU's Gaza policy: boon for dictators, bad for democrats

While they woo dictators and autocrats, EU policymakers are becoming ever more estranged from the world's democrats. The real tragedy is the erosion of one of Europe's key assets: its huge reserves of soft power, writes Shada Islam.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us