Hier gibt es Herrn Moscovicis Antworten auf die schriftlichen Fragen des ECON-Ausschuss‘:
Questions to Commissioner-designate for Economic and Financial Affairs, Taxation and Customs, Mr Pierre Moscovici
1. The working relationship between you and the Vice-Presidents is still not fully clear. Could you bring more clarification, including on who is representing the Commission in the different fora? How will you bridge ideological differences between you and the Vice-Presidents?
President-elect Juncker has decided to organise the College in a different way, in order to reinforce collegiality and prioritisation. This is in my view most welcome. Vice-President will act as his delegates and will ensure delivery of the key priorities set in his political guidelines. The mission letters sent to all Vice-presidents and commissioners set out very clearly the roles, objectives and means each of us will have at our disposal. As said during the hearing on 2 October, my portfolio will contribute to six of the seven priority projects given to Vice-Presidents. I am fully confident that we will all act in a collegiate spirit to ensure smooth coordination, under the authority of President Jean-Claude Juncker.
In more details, it is clear that both DG ECFIN and TAXUD will be placed under my authority. Of course, Vice-Presidents will have access to the services, in consultation with me.
It is also very clear that initiatives prepared under my authority would need to be agreed with the related VP, before being put on the Commission’s agenda. Concretely, this means that we would need to agree on political content in collegiate spirit. Joint proposals would require extra cooperation, which I fully accept with a positive attitude. Potential different views would need to be addressed in a constructive way, like in any other political executive or parliamentary body.
When it comes to the external representation, the mission letters give a coordination role to the VPs. President-elect already indicated in his press conference on 10 September that I would represent the Commission in the Eurogroup in my area of responsibility. He and VPs could of course decide to participate in Eurogroup meetings when necessary. Once formally appointed, I will discuss further with my colleagues how we organise ourselves for other international meetings.
2. In relation with the SGP could you give precise indications on the necessary conditions under which flexibility may be applied, and to which extent flexibility may be allowed? How do you interpret the concept of “exceptional circumstances” and “severe economic downturn”? Could you please give concrete examples of these concepts?
We all need to draw the lessons of the sovereign debt crisis. Europe committed itself to reducing both deficit and debt levels. I fully subscribe to what Jean-Claude Juncker said in his political guidelines “I do not believe that we can build sustainable growth on ever-growing mountains of debt”. This is matter of credibility for all of us, both EU institutions and Member States. This is why, as commissioner in charge, I will make sure that all Member States, big or small, apply the rules fully, without any exception. This is a matter of credibility, not only for the Commission and the commissioner in charge, but for the whole euro area.
Let me also recall for the 11 countries still under EDP that the correction of an excessive deficit is a Treaty obligation (Article 126(1) TFEU). The Commission being the Guardian of the Treaties, I will not hesitate to propose to Council the stepping-up of the procedure when a country fails to respect its Treaty commitments.
This being said, it is true that the Stability and Growth Pact (SGP) foresees some very targeted elements of so-called “flexibility”. Let me be clear on this. These provisions should not be understood as a way to circumvent or suspend the rules. And I will make sure that they are not abused by any Member State.
The flexibility elements added to the SGP during the crisis refer to factors and economic parameters that Commission and Council should take on board when assessing fiscal performances and taking decisions as foreseen in the SGP and relevant legislation. These factors might relate to the specific economic situation or other events, such as the implementation of major structural reforms, whether it relates to the nominal deficit target under the corrective arm or the structural adjustment target under the preventive arm. .Flexibility can be applied ex-ante, when setting the budgetary targets, or ex-post, when assessing their implementation. These flexibility elements should therefore be seen for what they are: allowing the Commission and the Council to take their decisions on a broader set of economic evidences, within the limits set by the SGP. This was also recalled by the European Council of 27th June, which called for „making best use of the flexibility that is built into the existing SGP rules“.
As to the „exceptional circumstances” and “severe economic downturn”: both have been defined in the SGP. Exceptional circumstances apply ex-ante when deciding if a deficit above 3% of GPD is or is not excessive. These circumstancesare defined as an unusual event outside the control of the authorities, which has a major impact on the financial position of the general government. The financial crisis of 2007-2008 is an example of such circumstances. The notion of a severe economic downturn is understood within the SGP as a negative real annual GDP growth or a large negative output gap, in the EU or the euro area as a whole. I have not seen evidence of such situation at the moment.
3. What action should apply to Member States whose budget deficit is constantly above 3% of GDP and which have already been granted an extension of the deadline to bringing down the deficit to Maastricht levels? Under which circumstances would you argue for granting more time or for applying sanctions? What action will you apply to a Member State whose public debt is constantly above 60% of GDP and increasing? Under what circumstances would you not recommend to apply sanctions?
The Stability and Growth Pact is very clear on these matters, and I will make sure that these rules are implemented by all. For countries not respecting the deficit criterion, and where the non-correction of the excessive deficit is due to deliberate lack of appropriate efforts and so-called „effective action“, this can, and in my view should, be ground for applying sanctions foreseen in the EU legislation. As I answered to the written questionnaire and as repeated in my hearing, I will not hesitate to step up the procedure for any country failing to take the necessary action, applying equal treatment to all, big or small, and assessing each and every one on its own merit, without any exception. I will ensure the full respect by all of all provisions of the Pact and the related so-called 6 pack and 2 pack. This is a matter of credibility, not only for the Commission and the commissioner in charge, but for the whole euro area.
The Stability and Growth Pact also foresees economic scenario whereby Member States may fail to correct their excessive deficit by the set deadline for reasons beyond their control. This is how the Commission and the Council have acted in recent years with a number of countries. It should be clear to all, that these provisions should not be seen as a way to circumvent or suspend the rules. And I will make sure they are not abused by any Member State. The elements to be taken into consideration by the Commission are clearly set out in the SGP (see answer to Question 2) and can be applied ex-ante, when setting the budgetary targets, or ex-post, when assessing their implementation. In these cases, revised recommendations and extended deadlines can be proposed by the Commission and granted by the Council.
The debt-criterion was not fully addressed within the Stability and Growth Pact before the crisis, when debt levels did not decrease sufficiently and in certain cases even increased above the 60% limit fixed in the Treaty. The most recent reform of the Stability and Growth Pact – in the six-pack – addresses this problem by defining a more precise rule that makes operational the Treaty requirement to Member States with high debt to have a “sufficiently diminishing” debt level, known as the debt rule.
A Member State with a debt above 60% of GDP is non-compliant with the debt rule if its debt is not sufficiently diminishing. Still, the assessment of the “sufficiently diminishing” criterion by the Commission is not automatic. In order to open an Excessive Deficit Procedure when observing that debt is not sufficiently decreasing, the EU law requires that the Commission writes a detailed report on the reasons and the relevant factors that have caused the debt to increase (or decrease too slowly). The list of the relevant factors was agreed during the negotiations with the European Parliament and the Council in 2011 and contains – among others – expected future debt dynamics and the economic conditions.
If the Commission deems that these relevant factors apply and if it believes that the Member State took appropriate action it will not recommend to open the Excessive Deficit Procedure nor to apply sanctions. If the Commission however deems that these factors do not apply, the Commission will propose to the Council to step up the procedure, including financial sanctions as foreseen in the rules (as agreed by all euro area Member States during the crisis). As a commissioner, I will not hesitate to use this option if a Member State does not fulfill its commitment.
4. You stated that you will revise the Six-pack and simplify it. Can you explain which rules in the Six-pack, EDP and MIP, in your view need simplification and outline more specifically the changes you intend to propose to the law? Could you put such a legislative initiative to the college or would you need approval or a positive recommendation by the Vice-President in charge of the Euro and Social Dialogue? As most of the procedures are based on Article 126 TFEU, which is quite prescriptive as far as the formal proceedings are concerned, do you think there is sufficient scope for simplification? Do you expect the procedure will still be simpler once both co-legislators will have worked on it? Based on the experience of the 6- and 2-Packs, which gestated over the best part of the past mandate, how long do you expect it will take this time between a proposal and the actual entry into force of the newly revised legislation? At the rhythm the economic governance is being overhauled, will there ever be one version that is correctly applied and enforced?
The EU’s economic governance system has gone through profound changes in the aftermath of the financial and economic crisis. The six-pack and two-pack legislation has been at the core of this evolution and has significantly bolstered the governance setup.
At the same time, the entry into force of the six-pack (and the two-pack) has increased the complexity of the system as a whole and of its various sub-elements, which poses challenges related to transparency, efficient implementation and ownership. The President-elect announced last July that his Commission will make proposals to strengthen and simplify our governance. In line with the review clauses included in the legislation comprising the six- pack and two-pack, the Commission shall conduct a review of the regulations to assess their effectiveness in achieving their policy objectives. This review will include, based on the experience so far, an analysis of strengths and weaknesses, and room for improvement. I count on your active involvement in discussion of this review, with the aim of reaching consensus on those measures necessary to further improve the economic governance setup. As announced by President-elect Juncker, this review will be “stability oriented” – meaning we should avoid the permanent overhauling the economic governance. Once this assessment is finalised, and having carefully listen to the Parliament and Council’s views, I will discuss with my colleagues on the best way forward.
Should the Commission consider it necessary, on the basis of the review, to propose changes to the economic governance framework it will come with the necessary – legislative and non-legislative – measures within the first year of its mandate. If that were to be the case the proposal would be prepared according to the Commission working methods and I will prepare it together with the relevant VPs. It is too early for me at this stage to pinpoint individual elements for simplification or possible changes in legislation that could be considered. In strengthening the economic governance setup we will always need to keep an integral vision on the functioning of the governance system as a whole, and the interaction between the different surveillance instruments.
For a swift adoption of new legislation, full support of the co-legislators is needed.
5. The scoreboard was created as an instrument to rapidly identify macroeconomic imbalances inside a country, in order to trigger where necessary an in-depth analysis. This was meant to avoid countries slipping into a situation where they might default on their debt. Could the inclusion of additional indicators result in the reduction of the effectiveness of the scoreboard as an instrument to identity countries that are at risk of severe economic imbalances? Isn’t the very comprehensive list of social indicators already included elsewhere properly fulfilling its task? One controversial area within the six-pack, was the macroeconomic scoreboard and the associated procedure for developing the indicators. Can you elaborate on which of the 11 indicators on the scoreboard you intend to keep and which you intend to change?
I realise that the Macroeconomic Imbalance Procedure (MIP) scoreboard has been a source of debate. It is important to put the scoreboard into context.
The MIP aims at preventing, detecting and correcting harmful developments which could affect the proper functioning of the economy of a Member State, and/or the EMU as whole. Let us all recall that the crisis was partly caused by uncontrolled imbalances in many EU countries, which turned into major threats for all. This should not happen again. The Macroeconomic Imbalance Procedure, introduced by the 2 –pack legislation (and further reinforced by the European Parliament), is our collective answer to this situation and a clear improvement in our new economic governance. We can no longer ignore potential risks in one Member State. As a commissioner, I will make sure the Commission will closely look at these potential imbalances and work with Member States that are experiencing such imbalances to correct them upstream.
This is therefore a procedure with a very wide scope and an extremely ambitious agenda. The scoreboard is an important part, but only a part of the procedure. The MIP is not a rule based system and any MIP decision relies on an economic assessment.
The implementation of the MIP starts every year with a scoreboard of eleven indicators, plus a number of auxiliary indicators. An economic reading of the scoreboard and the auxiliary indicators helps identify the Member States for which a more detailed analysis is necessary before reaching policy-relevant conclusions. It is only after a detailed analysis (the in-depth reviews) that the Commission concludes whether there are imbalances or excessive imbalances and prepares the policy recommendations. In the in-depth reviews we should consider all pertinent statistics, all relevant data, all material facts.
In other words, the policy conclusions are not and should not be a mechanical application of the scoreboard.
The scoreboard should remain a dynamic, high-quality, tool that can be adjusted in response to changes in the economic challenges as well as improvements in statistics. The current scope of the scoreboard is adequate to identify macroeconomic imbalances. The Commission made a number of technical adjustments to the scoreboard in the past years, in cooperation with the Parliament and the Council, and this should continue in future. In particular, a series of auxiliary indicators were added a year ago to acknowledge that the ultimate objective of the procedure is to avoid the social costs of the imbalances.
I would agree with Mrs Thyssen that, from a political viewpoint, we need to understand better the social implications of the imbalances and of the adjustment. At the same time, the procedure should remain focused on the causes of imbalances.
6. You mentioned the poor track record of the implementation of country specific recommendations in Member States. How do you think your concrete professional experience can help in changing this trend? What concrete measures will you undertake to increase the implementation rate of CSRs by Member States? Please can you give three examples of Country Specific Recommendations that you consider applicable to a country which needed to shift the tax burden away from labour in order to broaden the tax base. What is your view on the possibility to negotiate an interinstitutional agreement for enhancing the EU Semester process and in particular for the adoption the Annual Growth Survey? What are the legislative and non-legislative reforms you foresee for the EU Semester framework?
The implementation of country-specific recommendations can be improved by ensuring dialogue between the Commission and the Member States and enhancing the ownership of the process by the Member States; by more regular monitoring and discussions on common principles for reforms, such as the work which has already started in the Eurogroup; mutual learning from the reform efforts of other countries; by a better focus of the country-specific recommendations on key problems in order to allow for measurable follow-up and implementation; and the full use of the surveillance instruments which are provided in the legislation. Finally, more focus on estimating the economic and social impact of the reforms – by the Commission and by the Member States themselves can support the reform process.
In July of this year, the Council – on the basis of a recommendation by the European Commission – issued Country-Specific Recommendations to all Member States not subject to a macroeconomic adjustment programme. Several Member States were issued a Country-Specific Recommendation to shift the tax burden away from labour to other sources of revenue that are less harmful to growth and employment (in particular VAT, recurrent housing taxes and environmental taxes).
Latvia was recommended to „Pursue efforts to further reduce the tax burden on low‐income earners in the context of a shift towards more growth-friendly property and environmental taxes and by improving tax compliance and collection.“
Austria was recommended to „Reduce the high tax wedge on labour for low-income earners by shifting taxation to sources less detrimental to growth, such as recurrent taxes on immovable property, including by updating the tax base.“
France was recommended to „Further reduce the cost of labour in a budget neutral way, namely at the lower end of the wage scale in particular through targeted reductions in employer social security contributions taking into account the various wage support schemes.“ and to „Reduce the tax burden on labour and step up efforts to simplify and increase the efficiency of the tax system.”
I am strongly in favour of the European Parliament having a clear role in the choice of the annual economic policy priorities for the European Semester, on the basis of Commission proposals in the Annual Growth Survey and the integrated guidelines. This in my view is a natural role for the Parliament and the Council. There are many ways to achieve this.
President-elect Juncker has emphasised the need for a real political dialogue and not a bureaucratic exchange between the Commission and the European Parliament. Our work in the context of the European Semester should be guided by this spirit. The Vice-President for the Euro and Social Dialogue has been charged to co-ordinate the European Semester. Within the responsibilities assigned to me by the President-elect, I will support him in his task, including on the question of streamlining and reinforcing the European Semester so as to allow for more in-depth discussions with the European Parliament, national Parliaments, social partners and Member States‘ authorities. A key focus should be to step up the debate on the Annual Growth Survey and make sure that it is followed up at EU and Member State level.
The European Semester has since its introduction in 2010 functioned as an overarching framework for integrated multilateral economic and budgetary surveillance, allowing for closer coordination of Member States‘ economic policies. The increased ex-ante nature of the recommendations made to the Member States before final decisions are taken at national level, the improved analysis, dialogue with Member States, and the more integrated approach between fiscal and structural surveillance have been important contributors to the success of the European semester. At the same time, there is still room for improvement, in particular related to the ownership of and commitment to the implementation of the policy recommendations in the Member States, as well as the democratic legitimacy and accountability of the process. Achieving higher implementations of CSRs in the current institutional set-up while respecting subsidiarity calls for some understanding of the political economy of reform at the national level.
My concrete professional experience of having been Minister for the Economy and Finance of a large and complex member state gives me some insights into these questions – which I believe are key to get the job done. I have always been in favour of well-calibrated structural reforms to improve competitiveness and modernize our economies. I initiated and conducted several key reforms in my country between 2012-2014: „credit impôt/compétitivité“, labour market reform to reduce labour cost, professional training and „Pacte de responsabilité, which will lead to €40Mds cuts for companies over the next three years.
It is too early for me at this stage to pinpoint specific reforms in the European Semester framework to mitigate these weaknesses, this should be seen in the broader context of the review of the 6-pack and the 2-pack. Some steps are already being taken in by the various actors to reinforce incentives to reform implementation by using thematic review, benchmarking and reinforced monitoring. The review of the six-pack and the two-pack should in my view also include an analysis of the European Semester and ways forward in its strengthening; these would not necessarily have to be legislative initiatives but could also consist of changes in the implementation of the Semester process.
7. The two-pack regulation related to Member States experiencing or threatened with serious difficulties with respect to their financial stability foresees that Member States should involve the social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of financial assistance programmes, in accordance with national rules and practice. Current implementation of such provision is particularly poor if any according to these organisations. What do you intend to do for improving the compliance with such obligation?
President-elect Juncker has made clear that he wants to be the President of the social dialogue. I fully subscribe to this. I will work closely with Vice-President-designate Dombrovskis and Commissioner-designate Thyssen to help deliver it. I believe that effective social dialogue in programme countries is essential to broaden the ownership of the adjustment and reform strategy, and I welcome the provision in the two-pack that you refer to. Major reforms with a view to increase the performance of the labour market and to promote job creation may only be successful and sustainable if broadly supported.
When programmes were designed, as a rule time was given for the social partners and national authorities to come up together with reform and adjustment strategies. The regular programme reviews have also allowed for direct contacts between the social partners and the Troika and I will make sure that these will result in a permanent dialogue. But it is important to note that social dialogue – especially in a programme context – relies on a functioning social partnership and a sense of responsibility among all relevant national stakeholders.
I am committed to push for a further engagement of social partners in designing an effective response to the programme countries‘ challenges. As President-elect Juncker has set out, the preparation of social impact assessments will become an integral part of any future conditional stability support programme for euro area countries, in addition to fiscal sustainability assessments. Commissioner-elect Thyssen will evaluate this and we will work together to ensure that a strong emphasis is given to assessing the likely social as well as economic impact of proposed programme measures.
We need also to be clear that a programme is negotiated with the elected government of the respective Member State, which is ultimately responsible for its successful implementation. It is primarily for national governments and social partners to create a viable framework for effective social partnership within each Member State, in accordance with national rules and practice as the two-pack regulation states.
8. Several Member States came close to a default on their public debt and could only be saved thanks to the solidarity of the other members of the euro area, including through the newly created ESM. Do you think other countries might get into trouble, and what is the probability this might happen? Would you agree that the ‘mieux vaut prévenir que guérir’ principle should apply to countries with an already high debt? The European Parliament pointed out in its report on the troika that the ECJ opened the door for integrating the ESM into the community acquis in the ‚Pringle‘ case related to the ESM consistency with the Treaties. Do you commit to look forward for proposing the college of Commissioners to prepare a legal proposal with that purpose?
I believe lessons have been learned from the crisis regarding the monitoring of public (and private) debt developments. The Stability and Growth Pact as modified by the Six-Pack includes a debt rule (see question 3 above) that requires a close monitoring and the trigger of the EDP when appropriate. In addition, the Commission conducts regular debt sustainability analysis which leads to country specific recommendations for those countries for which the risks to debt sustainability so requires. Beyond the fiscal rules, debt developments are also part of the MIP and thus regular monitoring is undertaken in this context resulting in the necessary policy recommendations (see question 5 above).
All in all, the priority is effective implementation of the existing framework which was built to prevent any new member state to get into trouble.
The integration of the ESM in the EU framework is desirable, and as signalled by President-elect Juncker, the new College will look into the possibilities of moving into this direction. Complex legal and financial issues will have to be looked at. To name just a few: would its outstanding liabilities become EU liabilities? What impact would it have on the multiannual financial framework? One would have to assess thoroughly all possible consequences and whether this can be done by using a legal basis in the present Treaty (such as Article 352 TFEU) or if it requires a Treaty change. In both cases, a unanimous support from Member States would be required, a conditions which appears prima facie politically quite challenging.
9. The countries that were saved from a default were all of relatively small size, yet the ESM needed to be a very large instrument, which also proved to be very difficult to set up. Do you think that the EU has the financial capacity and the political will to build up the financial firepower to save large countries from a default? Looking at past experience of the Troika in the case of Greece, what actions would you repeat in the same way, and what would you do differently in cases of countries that are subject to a stabilisation programme? Could you elaborate on what you meant by a European fiscal capacity, as well as on the notion of risk sharing? Which concrete measures will you propose in order to improve the transparency and democratic accountability of European economic policy, the Eurogroup ant the troika in particular?
The pure EU financial capacity is de facto very limited. The EFSM is already constructed in such a way that it can use the entire margin available under the own resources ceiling, whatever the latter is. Yet its capacity was assessed in 2010 as being only EUR60bn euro. This is per se a big amount, but unfortunately a small one if compared to the annual refinancing needs of large Member States. It would not allow replacing a regular market financing. The EFSM has been complemented by the ESM which has a much larger financial capacity. The need for financial assistance may vary depending on the circumstances and it does not always mean that the country has completely lost access to market financing. More generally, difficulties in a large Member State would most likely call for actions going beyond a mere financial assistance.
In my personal view, the two main lessons we should take of the experience with the Troika in Greece are one the one hand that in the future, stabilization programmes should take more into consideration the social impact of adjustment, and on the other hand, that democratic legitimacy of the Troika should be strongly reinforced. These two aspects have been stressed by President-elect Juncker in his political guidelines.
If you look over the world, you see that successful monetary unions benefit from common instruments helping their members adjust their respective economies. This is the idea of a fiscal capacity, which was launched in the Commission’s Blueprint for a deep and genuine Economic and Monetary Union. As stressed in the Blueprint, an autonomous fiscal capacity building on own resources can support the policy choices resulting from a deeper coordination and provide an amount of insurance against asymmetric developments. This is what risk-sharing is about and – correctly designed and implemented – it would be in the interest of all members states as it would help make the EMU more stable. Obviously this cannot imply setting up permanent transfers between member states.
I am aware that a fiscal capacity supporting our monetary union can only be built over time. In particular, further credible progress in reviving growth and reducing debts is necessary to achieve the high level of confidence and mutual trust that will be needed for this kind of idea to prosper. But while today we clearly see the monetary leg of EMU, we still need to work further on the economic leg, and a fiscal capacity should eventually be part of it.
10. You stated your strong support for the FTT. What does this mean in concrete action? Could you explain what concrete step you will undertake for the CCCTB to be implemented? Do you think that the inclusion of taxation in the European Semester will amount to an attempt to harmonise taxation? Would this be in line with the spirit of the Treaty, which foresees unanimity in Council when it comes to taxation issues?
I stand ready to support the FTT initiative by means of both technical support and political dialogue. That could be helpful for the participating Member States to reach the aimed-at agreement by the end of this year on the first step of the gradual phasing in of a fully-fledged FTT, and to be in force by 1 January 2016. I understand that the 11 Member States concerned are – also assisted by the Commission services -possibly close to a tentative agreement on the basic taxation principles (scope and allocation of the power to tax to individual MS). Against this background, intense preparatory work is underway to translate such agreement into legal text. Moreover, I will ensure that the Commission services will technically assist the participating Member States in the definition of the implementation framework of the tax; both as far as the collection of revenues and the verification of payments are concerned.
In parallel, I will continue to encourage transparency in the decision making process towards non-participating Member States in the light of the Treaties’ provisions on enhanced cooperation. My continuous preoccupation will be to involve non-participating Member States in the process as foreseen under the Treaties, and make sure that their rights, competences and obligations are respected and fulfilled. It should be remembered that the purpose of enhanced cooperation is to get more MS on board.
Turning to the CCCTB, Since the Commission made its proposal, the project has been languishing in technical groups at the Council. In the meantime, the initial political impetus seems to have waned.
I intend to bring the CCCTB back on to the political agenda and to push forward the debate of this initiative at Ministerial level in the context of the current political priorities. In particular, we need to address the need for simplification and Member States‘ revenue interests as well as examine how the CCCTB can contribute to the accomplishment of the objective of curbing tax base erosion and profit shifting (BEPS).
As regards the European Semester, since the first cycle in 2010-201, taxation has been included in the exercise. This is not about harmonisation per se: it is about making the tax systems of the Member States more growth-friendly and fairer, in line with the objectives of Europe’s agenda for growth and jobs. This is not an attack against unanimity: country-specific recommendations, proposed by the Commission and approved by the Council, recognise Member States’ competences in the field of taxation. Nevertheless I will draw the appropriate conclusions about the need for action at EU level if it becomes clear that action, either legislative or in terms of soft law, is necessary to remedy problems that cannot be adequately solved at Member state level.
11. Your portfolio as commissioner would include tax policy and you speak of the need to revisit the Common Consolidated Corporate Tax Base proposal. In that process, will you work to ensure that a sufficiently large minimum tax rate is agreed upon, such that corporations operating in Europe pay an increasing contribution to public budgets again?
I think it is only fair that each and every taxpayer pays a contribution to the Member States’ budget. In general, how much this contribution should be per type of taxpayer depends on the general tax structure of each Member State and is therefore a national issue, not a community one.
Differences amongst Member States result from political decisions, differences in approaches for the provision of public goods and service and national financing systems.
I accept these differences. Not that some companies pay zero tax or no tax on taxable gains.
In response to such practices, political willingness has led to the development of important initiatives against aggressive tax planning internationally and within the EU (e.g. BEPS at the OECD and the Commission’s Action Plan of 2012). The actions planned cover a wide range of issues in international taxation. To the extent that these actions do not ensure that companies pay their fair share, I will be prepared to look carefully at options involving agreement on tax rates. I will do this in the context of a wide ranging examination of corporate taxation in the EU based on a critical evaluation of how to push forward on the ideas contained in the CCCTB proposal.
12. Do you still believe that a devaluation of the Euro is necessary for the success of the Eurozone as a whole? Can and will the Commission act in case of a deflationary scenario? What concrete measures could the Commission envisage?
The exchange rate is not a policy target of the euro area. Unlike other currencies in the world the euro is a floating currency and therefore cannot be devalued. However, the exchange rate is an important factor for growth and inflation. Exchange rates reflect economic fundamentals over time. The recent depreciation trend of the euro appears consistent with cyclical differences between the major advanced economies (e.g. the Eurozone underperforms the USA for instance). Thus in my view the success of the Eurozone as a whole depends primarily on better macroeconomic coordination among member states.
In case of a deflationary scenario, the main tools for action lie in my view at the European level as far as monetary policy is concerned (ECB) and at the national level as far as fiscal and structural policies are concerned. The Commission would therefore mainly act as a coordinating body to help member states combat deflation in a cooperative way. One of the most important contributions though, would be to analyse swiftly to what extent potential deflationary dynamics are at play at the level of the Eurozone.
13. Can you confirm when you will put forward a proposal to establish a single external representation of the euro area based on article 138 TFEU? Could you be more specific on the scope of the proposal and list the international bodies which you foresee the euro area should have a single representation?
The political relevance of the euro area has been enhanced in recent years by the strengthening of its internal economic governance. But the progress that has been achieved on further integration still has to be projected externally, notably through progress towards united external economic representation of the euro area. As Commissioner, I would work towards the objective set out in President-elect Juncker’s Political Guidelines which promise, within the first year of the mandate, a proposal for a more efficient external representation of our Economic and Monetary Union.
The International Monetary Fund (IMF), through its lending instruments and surveillance, is an essential pillar of global economic governance. Therefore, to be relevant and meaningful, the strengthening of euro area representation should start from the IMF. The IMF according to its Articles of Agreement is a country-based institution so at the moment the European Union or the euro area cannot become shareholder. However, it is important that euro area views are presented consistently at the IMF.
For this, it would make sense either to have the euro area position presented formally by a single representative or, where this is not yet feasible, at least to have the euro area represented alongside its members in the IMF’s main decision-making body, the Executive Board. This would allow delivering a single message on issues such as economic and fiscal policy, macroeconomic surveillance, exchange rate policies, and financial stability. It would give the euro area the opportunity to participate in designing the evolving rules of the international financial architecture, as well as to contribute to the completion of the external dimension of EMU. Similar approach would apply for other international institutions or international economic fora.
14. In your written answers to questions from the ECON committee, you talk about the need of continued consolidation of public deficits in some member states, “by curbing unproductive public spending and rendering revenue systems more efficient”. Can you specify what you mean by “unproductive spending”? In particular, can you exclude the possibility of further cuts to social security and social benefit systems in Europe?
In spite of the substantial adjustment carried out over the past years in several Member States, ensuring the sustainability of public finances will remain key in the future. The challenges ahead will undoubtedly differ across Member States, but in all cases, it will be crucial to improve the quality of expenditure and the overall efficiency of the tax systems.
In this respect, it should be noted that expenditure quality results from the combination of two main aspects: (i) the composition of expenditures and in particular the weight of more growth-friendly spending items; and (ii) the efficiency of expenditures, i.e. how well public resources are translated into services to citizens and business.
Thus, „unproductive expenditure“ does not specifically target an expenditure category. Let me be more concrete: a Member State may be spending a substantial amount on public infrastructure; if these investments are not done in an efficient manner – targeting the country needs – then, this expenditure in infrastructure would be „unproductive“. The same reasoning applies to social security or social benefits related expenditure.
My aim is that the concepts of quality and efficiency of public expenditure and revenue, whatever the category, are integrated in the budgetary strategies of the Member States so that the impact of fiscal consolidation on growth is limited. The relation between total amounts spent and quality of the delivery should be a key element of the budgetary choices made by Member States.
15. Your portfolio as commissioner would include tax policy and you speak of the need to revisit the Common Consolidated Corporate Tax Base proposal. In that process, will you work to ensure that a sufficiently large minimum tax rate is agreed upon, such that corporations operating in Europe pay an increasing contribution to public budgets again?
See question 11 – identical
16. In the investigations opened by the EU Commission against Ireland and Luxemburg for potentially illegal subsidies to Apple and Fiat Investment and Trade, respectively, will you make sure that the practice of offering corporate tax rebates is condemned and punitive fines are levied on the offending member states?
As commissioner, I will use all instruments at Commission’s disposal to put an end to the current situation, whereby international companies de facto chose the taxation level applying to them. .
State aids policy is clearly one of these instruments. In this area, the Commission has powerful tool to correct competition distortions, which appear to be unjustified and unproductive. I will work closely with my colleague Margrethe Vestager, in charge of Competition policy, to ensure that the Commission fights effectively against aggressive tax planning.
The other main instrument for combatting harmful tax competition is the Code of Code Group for Business Taxation which meets in Council. I will give a priority to encouraging a review and strengthening of the process so that this instrument can complement State Aid procedures.
17. The two-pack regulation related to Member States experiencing or threatened with serious difficulties with respect to their financial stability foresees that Member States should involve the social partners and civil society organisations in the preparation, implementation, monitoring and evaluation of financial assistance programmes, in accordance with national rules and practice. Current implementation of such provision is particularly poor if any according to these organisations. What do you intend to do for improving the compliance with such obligation?
[see question 7 above, identical]
18. The current level of average unemployment in the Eurozone is 12.8% is this acceptable and, if not, what is an acceptable level for you to say the EU economic policies are working?
There is obviously no clear-cut figure that helps separating acceptable from unacceptable unemployment levels. The current level of unemployment for the Eurozone as a whole is well above what recorded before the crisis [7.5% in 2007]. Most notably, unemployment has reached record-high levels in some of the countries that were more severely hit by the debt crisis. The social costs of the current unemployment problem are linked not only to the sheer size of the number of people out of work. The fact that there are very few jobs created is at the root of a very serious youth unemployment problem and has its counterpart in the lengthening of unemployment spells, growing inactivity and marginalisation.
To say that EU economic policies are working would mean two different things: on the one hand that unemployment levels revert to their structural, long term levels, and on the other hand, that structural levels of unemployment are reduced. The first objective measures the success of monetary and fiscal policies, the second of structural reforms implemented by the member states.
As I stressed already, fighting unemployment in a sustainable manner will be one of the main goals of this Commission – its historical responsibility.
19. If the level of unemployment rises what is the level that you would suggest indicates that your department has not implemented policies that are working?
My goal – and the metrics of our collective success is a lower level of unemployment. One could not ask citizens to wait or understand if we are not able to deliver this in the course of the current mandate.
The Commission as a whole has been very active over the past few years to support job creation, more dynamic labour markets and trigger specific measures to lower youth unemployment. As written in previous answers, implementation of these policies is not strong enough to provide full impact. I will continue to push for this pro-jobs agenda, together with my colleague Marianne Thyssen.
1. Despite the restrictive ECJ Judgment of April 2014 regarding data retention (Joined Cases C-293/12 and C-594/12, 8 April 2014), DG TAXUD and OLAF plan the establishment of a large database, with inter alia the aim to tackle tax fraud and to thus ensure correct tax revenue. The database would contain bulk data for customs purposes which would also include personal data as well as data on economic operators. In light of the ECJ judgment: what is your view in terms of legality and proportionality of the bulk storage and processing of such huge amounts of data? In your view, how can be ensured that these vast amounts of sensitive data cannot be accessed by third countries and other unauthorized persons/institutions?
The database you are referring to is indeed a database of OLAF it is not one of TAXUD. It therefore falls in the remit of my Colleague Vice President’s GEORGIEVA’s portfolio. According to the information I have on this case, the respect of data protection rules will be reinforced in the on-going revision of this Regulation.
Concerning proposal and tools to fight against tax fraud and evasion, I will make sure that they are effective while respecting all relevant EU Data protection rules.
2. The Commission is currently developing Delegated and Implementing Acts for the recently adopted Union Customs Code. How will the Commissioner ensure that the Delegated and Implementing Acts provide for further trade facilitation and is the Commissioner prepared to conduct an impact assessment if some of the elements proposed in the Implementing or Delegated Acts have major consequences on legitimate trade? Taking into account the vast amount of provisions related to the delegated and implementing acts to be adopted for the Union Customs Code, which concrete measures will the Commissioner take to ensure proper participation of and information to the Parliament? This legislation will be supplemented by the proposed Directive on customs infringements and sanctions which is currently blocked in the Council. Do you commit to defend the text proposed by the Commission in order to tackle different enforcements of Customs legislation within the European Union which have a negative impact on the level playing field between economic operators?
The Union Customs Code is the legal tool and includes provisions with the aim of facilitating trade in the future (see for example, recital 15 of Regulation (EU) 952/2013). The Delegated and Implementing Acts now under discussion, on one hand will supplement and interpret non-essential elements of the Union Customs Code. On the other hand, they will ensure uniform conditions for the implementation of its provisions throughout the EU, in line with what it is required by Articles 290 and 291 TFEU. Thus, both the Delegated and Implementing Acts will be drafted in line with the objectives the Union Customs Code is aimed at and within its limits.
As mentioned before, Delegated and Implementing acts cannot go beyond the basic act. Therefore, their consequences are covered by the Impact Assessment carried out for the Union Customs Code.
The participation of and the information to the Parliament are governed by the Framework Agreement on relations between the European Parliament and the European Commission. On that respect, all the information and documents used in the discussions in the Expert Group are provided to IMCO which has been regularly invited and represented in the meetings held during the 1st review cycle of the draft.
As regards the proposed Directive on customs infringements and sanctions, I would like to point out that the proposal is not blocked but under discussion in the Council.
Levelling the playing field between the economic operators is one of the major objectives of the proposal. I will defend it in the on-going discussions while being flexible to changes to the text which do not compromise the objectives already reflected in the recitals of the proposal and the Impact Assessment.
3. What specific measures does the Commissioner-designate foresee to improve the interaction between Member State customs and market surveillance authorities in view of the need to better ensure that counterfeit and/or dangerous products do not find their way onto the EU market?
In order to better protect the European citizens and ensure that counterfeit and/or dangerous products do not find their way onto the EU market, the interaction between Member State customs and market surveillance authorities will have to be improved/reinforced. Such improvement/reinforcement will be pursued by using three complementary tools:
Firstly, through the increase of the coordination/cooperation between Customs and market surveillance authorities (MSAs). I will, in this context, support the implementation by all Member States of the elements contained in the Guidelines for import controls in the area of product safety and compliance.
There will be visits to the 28 MS and candidate countries to support the Guidelines implementation and recommendations will be made where needed. From a technical dimension, I will ask the Commission’s services to not only develop IT tools for information sharing between Customs and MSAs but also to deepen such cooperation through the creation of an EU Single Window Environment allowing for the automatic check of veterinary, phyto-sanitary and environmental certificates by Customs IT systems. Finally, I commit to publish already in 2015 a EU report on unsafe or non-compliant goods found by Customs at the EU external border to complement the RAPEX annual reporting. This report will notably present customs interventions on product safety and compliance, the communication between Customs and MSAs on goods found at the border and the number of refusals of goods for release for free circulation in the EU.
Secondly, through the prevention by developing a common risk management approach to product safety controls, in the context of the Risk management Strategy and Action Plan adopted by the Commission in August 2014.
Thirdly, through the enhancement of joint activities between Customs and MSAs (such as the Customs 2020 Project Group on Product Safety and Compliance, workshops, exchange of best practices, joint trainings) but also of joint control operations at the border on selected products, in the context of the PROSAFE organisation.