Sven Giegold
Member of the European Parliament – Greens/EFA Group

Speaker of the German Green Delegation

Start of the Tax Subcommittee in the European Parliament: Lift the blockade for tax justice in Europe

Today, Sept. 23 at 9am, the constitutive meeting of the new Tax Subcommittee of the European Parliament took place. In this meeting the committee Chairpersons were elected. The Chairman is Paul Tang (S&D). Kira Peter-Hansen is the third Vice-Chair for the Greens. Sven Giegold is coordinator for the Greens/EFA group in the new subcommittee.

MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:

 

“The new and permanent tax sub-committee of the European Parliament comes at just the right moment. The Corona crisis is leaving massive holes in the public coffers of European states. However, the economic recovery and green transformation won’t work with austerity programmes but require courageous investments for the future. This will bring the fight against tax evasion, tax avoidance and financial crime back on the political agenda in the coming months and years.

 

The new committee will put pressure on the Council to finally adopt blocked tax initiatives such as public country-by-country reporting, the digital tax, the financial transaction tax, the VAT reform and the Common Consolidated Corporate Tax Base (CCCTB). I have proposed to the committee that a hearing be held with the Council member states on each of the blocked initiatives. This series of hearings must create a constructive embarrassment for the member states. The ball is now in the German Presidency’s court to lift the blockades in the Council. There has never been a better time to finally end European tax dumping and to fight for European tax justice”.

 

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A few of the priorities for our work from a green perspective:

Minimum tax rates for companies and digital tax

The European Union must become a global leader in the fight for tax justice. Since the United States have at least partially withdrawn from the OECD corporate tax negotiations, Europe must now take action itself. We need European minimum tax rates on corporate profits. Moreover: The German hesitation on the digital tax has already cost more than 10 billion euros in tax revenue in Europe. The questions of corporate taxation and the digital tax will certainly occupy the new subcommittee.

Make pressure for tax transparency of large enterprises

We want to make sure that the tax committee also deals with Europe’s sharpest sword against tax avoidance: tax transparency for large corporates (public country-by-country reporting). While the European Parliament has long since approved the proposal, the Council has been blocking it for years. At present, it is up to the German Council Presidency to finally put the issue on the agenda for a vote. We want to exert pressure here. In addition to country-by-country reporting, the Council is blocking the Common Consolidated Corporate Tax Base (CCCTB) approved by the European Parliament, the fraud-proof reform of VAT and the Financial Transaction Tax. The main blocker has been the grand coalition in Berlin for years.

Brexit: Focus on new tax competition and the British overseas territories

Even the smoldering dispute over Brexit is not unaffected by the tax question. We want to put it on the agenda of the new subcommittee. Along with the EU, Great Britain is also leaving the European Code of Conduct Group, in which issues of corporate taxation are discussed. As far as the rules for tax avoidance are concerned, the British government has repeatedly signaled that it no longer wants to comply with EU standards after Brexit. Even before Brexit, British tax havens undermined European tax law. Europe must use future trade relations with the UK to put an end to tax dumping via British tax havens. In general, bilateral trade agreements must become an instrument against tax avoidance, tax fraud and money laundering.

Exploitation of workers in the internal market and tax losses

Dumping employment, a reality in German slaughterhouses, occurs in many EU member states and also has an impact on tax revenues. Subcontractors from Eastern Europe have exploited the workers in German slaughterhouses below the minimum wage, thus also depriving the tax authorities of revenue. False self-employment is common in the construction, logistics, agriculture, sexual services and care sector. Workers are paid low wages without effective social security. This not only leads to unfair competition with decently paying companies, but it also means that local communities, where the actual work is carried out, miss out on part of the trade tax. So far, this issue has been completely below the radar in the debate on tax justice.

Money laundering and tax avoidance with real estate

Another tax-related topic that is a source of concern for many people are exploding rents and unaffordable residential real estate. Apartments and houses have become extremely attractive as investment objects due to low interest rates, which drives up prices. But also criminal money contributes to the explosion of rents in attractive locations. In addition, national tax law and bilateral tax treaties offer special rules to reduce taxes on income from real estate sales and rental income. In the real estate sector, tax evaders and money launderers are particularly active because the controls are still too soft and the rules are fragmented. We need standardization here.

Crypto-currencies and other assets

Digital currencies have developed their own global payment system, for which there are no tax reporting requirements and which is a gateway for criminal money. Income from Bitcoin & Co. must be effectively taxed just like other income.

Ecological taxes and duties

As part of the European Green Deal, the EU emission trading system has to be tightened up so that carbon dioxide emissions finally have a relevant price. A proposal is also planned to standardize energy taxation in Europe so that, for example, senseless cross-border gasoline traffic motivated by tax differentials ends. All measures must ensure the following: They must be effective and social. Only a relevant CO2 price is effective. It must not distort competition for greenhouse gas-intensive industries, and must therefore be balanced at the external borders. And: The revenues must be paid back to the population in such a way that inequality does not increase further, but that people with low incomes are better off than before.

Tax competition for rich private individuals

More and more EU countries are extending tax competition from companies and capital income to rich individuals. The sale of EU citizenships and residence permits (golden passports and golden visa) is also used for tax dumping or money laundering. The EU Commission and member states must address this issue and stop tabooing it. If necessary, member states must ensure a minimum level of taxation for citizens living abroad.