Britannia Radio

EURACTIV.FR |

08/10/2010 |

ECONOMY AND FINANCE

According to the Commissioner of Taxation, Customs Union,

audit and anti-fraud, the financial crisis

is an opportunity to review the EU tax.

The European tax harmonization to overcome the crisis

During his hearing before the European Affairs Committee, Tuesday, Oct. 5, the European Commissioner for Taxation and Algirdas Semeta members present acknowledged the risk that tax competition is too high for European unity. Faced with the crisis states seek to boost growth and employment in their territory while trying to contain their budget. In addition to reducing public expenditure, countries seek to attract new capital by adjusting the tax competition. Competition applied within the EU.

According to Algirdas Semeta, the financial crisis has nonetheless allowed member states to realize the importance of tax harmonization. France and Germany have already started to reflect on a bilateral tax convergence project. In the image of this initiative, the Commissioner and members discussed issues of calculating a common base for corporate tax (IS) and a more consistent rate of VAT. The proposal to tax the financial sector was also discussed. The commissioner stressed that the completion of these projects depended largely on "the willingness of Member States".

VAT on financial sector

Since the beginning of the crisis, the financial sector beckoned. Escaping far to VAT, it remains one of the least taxed. Reflections on a system of taxation of financial transactions were initiated by the EU but their implementation remains elusive. The deputies, Jean-Yves Cousin (UMP) and Jean Gaubert (PS) asked the Commissioner for clarification on the modalities of implementation that may be implemented by the Commission.

In this regard, Algirdas Semeta recalled that two tracks are already explored. The first deals with the taxation of financial transactions. The second on financial activities that is to say, the fees and profits generated by transactions. To avoid capital flight, these proposals will fail, according to the Commissioner that as part of a global agreement.

Another sensitive issue raised by members including UMP Philippe Cochet and Jacques Myard: tax competition and tax havens. If the EU undertook to open negotiations with the countries concerned, the subject remains taboo. The Commissioner recognizes that the means put in place are inadequate today.

However he assured the French deputies that the European Council was currently working to develop the program Eurofisc. This structure is common to EU Member States should allow to act more quickly in the fight against tax evasion. It could also "facilitate the exchange of bank information," said Semeta.

Tax harmonization

Exemptions and tax competition representing a significant decrease in revenue of states. These losses are likely to deprive the EU of additional resources at a time when it seeks to increase its budget to meet the new objectives of Europe 2020.

The idea of tax harmonization on VAT and CIT is not new. As a reminder, a project to harmonize tax called "Working Group on a Common Consolidated Corporate Tax (CCCTB) was opened on the occasion of the Lisbon strategy. The Commissioner expressed his doubts about the effectiveness of rate cuts VAT in certain sectors such as recently in France for the restoration or construction. He said the exemptions could even exacerbate the wealth gap between people. Algirdas Semeta encourages states to find other modes of action.

The commissioner also said a Green Paper on Harmonisation of VAT is being drafted. General statements were also planned but no details on the agenda was given. As for the harmonization of the SI, the Commissioner has been more moderate. Codes of conduct, to identify harmful tax competition, have some progress.

An update is needed anyway to respond to market changes. The creation of a common base for the rest IS considered by the Commission. Following the model of the "snake" in place before the entry into force of the euro, the EU could set a maximum rate and minimum tax for corporations. The Commission hopes to launch a first proposal in early 2011.

CALENDAR:

12 October:

meeting in Brussels the "Group of fiscal policy"
Marina Borrelli