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

Speaker of the German Green Delegation

Tax cooperation in Europe: Conservatives glorify outdated notion of “beneficial tax competition“ and national tax sovereignty

Yesterday, 27 May, the European Parliament’s Economic and Monetary Affairs Committee voted on my “Report on the implementation of EU requirements for the exchange of tax information: Progress, lessons learned and obstacles to be overcome”. In a first vote on the amendments, there was broad support for the jointly drafted compromise amendments. However, five amendments of the right-wing Conservatives and Christian Democrats, which emphasise the tax sovereignty of the European Member States and the very limited role of the European Parliament in tax matters, also received a majority. Four of these amendments (24, 33, 81 and 84) were tabled by the European Conservatives and Reformists Group (ECR), amendment 44 came from the EPP Group. Liberals, Christian Democrats (EPP), as well as MEPs from the ECR and the Identity and Democracy Group (ID) voted in favour of these amendments. By a very narrow majority, two other amendments (27 and 35) of the ECR Group, which emphasised the supposed advantages of tax competition between states, were rejected.

The implementation report was adopted with 46 votes in favour, six against and six abstentions. The ECR voted unanimously against, all but one parliamentarian from the ID Group abstained.

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

“The Conservatives are undermining the role of the European Parliament in tax matters. The amendments adopted by the Conservatives represent a step backwards compared to previous positions of the Parliament. We do not need any more praise for tax competition in Europe, but greater cooperation in Europe against tax dumping.

What the Conservatives call “defence of national sovereignty” actually means massive tax damage for the majority of the population. It is a paradox: while the Council wants to involve the European Parliament more in tax matters, the Christian Democrats now want European tax law without competences for the European Parliament. The national tax authorities urgently need to cooperate better to prevent tax avoidance, tax fraud and tax evasion. The implementation report reveals glaring deficiencies in the cooperation between Member States when it comes to tax matters. With their amendments, the Conservatives undermine the urgently needed oversight role of Parliament. Billions of euros in tax revenue are lost every year due to tax evasion, tax avoidance and tax fraud. Citizens have a right to know what Member States are doing about it. In the run-up to the report, Member States have refused to give Parliament access to crucial information on the implementation of the Directive in Member States.

For more than a year, my team and I have worked on this implementation report, involving all political groups. The cooperation with the political groups actively involved has always been constructive from all sides. The shadow rapporteur for the Conservatives and Reformers Group did not participate in this work. Despite participating in the negotiations of the compromise amendments, the right-wing Conservatives are now trying to obstruct and unnecessarily politicise the encompassing and precise work of Parliament. It is regrettable that Christian Democrats and many Liberals participated. The Greens/EFA will table further amendments before the plenary vote to prevent this backward positioning. In the roll call plenary vote, we will see who takes a progressive position on tax issues.”

UPDATE: Final implementation report as adopted by the ECON Committee: https://sven-giegold.de/wp-content/uploads/2021/06/DAC-Implementation-report-as-adopted-by-ECON-Committee.docx

Commitment by Member States for greater involvement of the European Parliament in tax matters: https://sven-giegold.de/en/tax-cooperation-in-europe-fiscalis-programme/

Key findings from my implementation report: https://sven-giegold.de/en/member-states-cooperate-insufficiently-in-tax-matters/

Relevant Amendments:

Amendment 24 (ECR) – adopted with 30 votes in favour, 26 against and 1 abstention: “whereas the Parliament fully respects the principle of national tax sovereignty”;
Green assessment: In a globalised world and in a European internal market, there is no such thing as unrestricted national tax sovereignty, therefore the European Parliament should not respect “tax sovereignty without restriction”. Instead, we need binding rules in the EU internal market, also in the area of taxation, not least to give nation states back their scope for action in the area of taxation.

Amendment 27 (ECR) – rejected with 28 votes in favour, 29 against and 2 abstentions: “whereas fighting tax fraud and tax evasion should not diminish the fruitful benefits of the tax competition”;
Green assessment: Tax competition leads to a race to the bottom that benefits tax-avoiding companies and harms honest taxpayers. Through tax competition and tax havens, the public purse loses much-needed revenue for investment in education, health and the green transformation. The tax system is also becoming more and more unfair as taxes are squeezed, especially for large companies and top earners, while the middle class has to pay more and more.

Amendment 33 (ECR) – adopted by 31 votes in favour, 26 against and 1 abstention: “whereas the Parliament acknowledges it has no legislative power in the area of direct taxation and has only a limited legislative power over the indirect taxation”;
Green assessment: The European Parliament has to be involved in the legislative process with an opinion on all EU laws in the field of taxation. Without an opinion of the European Parliament, no laws are passed in the EU even in the area of direct taxation. The statement is therefore simply wrong. On the contrary, the area of taxation is not subject to co-decision by the European Parliament and decisions are taken unanimously in the Council. However, this does not mean that the European Parliament has no powers in the area of direct taxation. On the contrary, after the LuxLeaks and the Panama Papers scandals, the Parliament has helped shape the EU legislative agenda.

Amendment 35 (ECR, see below for roll call vote) – rejected with 27 votes in favour, 30 against and 2 abstentions: “whereas the Parliament respects and supports the benefits of tax competition among Member States”;
Green assessment: See Amendment 27, although the wording of Amendment 35 is even more problematic. As the European Parliament has recently made clear again in its report on tax havens, it does not at all support tax havens such as Ireland and Luxembourg: https://sven-giegold.de/en/landmark-decision-eu-list-tax-havens/

Amendment 44 (EPP) – adopted by 37 votes in favour and 22 against: “whereas tax policies are at the core of national fiscal and tax sovereignty and represent national competences, any major decision at the European level must be based on a strict respect for the intergovernamental logic that presides this field of European integration; whereas important decisions on further integration on this matter must be taken always respecting the treaties, national competences and fiscal and tax national sovereignty; whereas this Parliament stands with the ambition to find innovative solutions on tax matters, having in regard the institutional framework that we want to preserve”;
Green assessment: See Amendment 33.

Draft report: https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/ECON/PR/2021/05-27/1221618EN.pdf

All amendments: https://www.europarl.europa.eu/meetdocs/2014_2019/plmrep/COMMITTEES/ECON/AM/2021/05-27/1227024EN.pdf

Result of roll call vote on Amendment 35:

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