Today is a good day for honest taxpayers and a bad day for the tax planning industry. The European Parliament calls for the ending of banking secrecy and a comprehensive package against aggressive tax dodging. This could balance unfair austerity programmes in a time of tight budgets and high debt levels in the member states. Ten years after I co-founded the Tax Justice Network, this resolution is also of personal joy to me.
The MEPs demand for the extension of automatic exchange of information in tax matters and of the scope of the savings tax directive. Banking secrecy should come to an end. Attempts by the German and other governments to establish final withholding taxes in conjunction with tax amnesty are rejected by the chamber.
In the area of company taxation the European Parliament calls for an end of tax competition which is to the detriment of public households and for the implementation of a common consolidated corporate tax base (CCCTB). A common corporate tax base would ensure greater transparency of corporate tax in the EU and reduce the scope for tax evasion, as well as reducing the administrative burden for tax compliant cross border firms. The CCCTB has to be binding, and the EP has underlined this point today, calling for a mandatory CCCTB for all large enterprises. A non-mandatory scheme would create a 28th tax regime in the EU and thus rather increase tax competition than limit it. The ambition to increase revenue cannot be achieved like this. Unfortunately conservatives (EPP) and liberals (ALDE) were not willing to call for minimum tax rates. They rather continue worshipping tax competition between the Member States’ corporate taxation regimes.
The European Commission is asked to come forward with additional measures in order to close loopholes in company taxation. The revision of the parent subsidiary directive and the interests and royalties directive is imperative to stop the application of harmful structures such as hybrid entities and financial instruments, vastly applied in double-non-taxation schemes.
Although the resolution is not legally binding for the bodies addressed by it (i.e. Council and Commission), it can nonetheless build up political pressure as experienced with the successful calls of the European Parliament for a European financial transaction tax.
In order to protect national regimes containing different privileges and loopholes member states are blocking progress in tax cooperation using the unanimity requirement in tax matters foreseen in the EU treaties. The primary countries leading this discipline are the Netherlands, Austria, Luxembourg and Ireland. Countries suffering from this selfish behaviour should not wait any longer.
Member States now have to deliver on their commitments from the fiscal package to make progress in tax coordination. In case the EU 27 cannot advance in this field the tool of enhanced cooperation needs to be applied. In such an enhanced cooperation willing Member States could harmonise their tax systems without being blocked by unanimity and together increase the pressure on tax havens and tax dumping practices.