Let us continue our inventory of examples to inspire hope.
The important question of the common consolidated corporate tax base (CCCTB) has been under discussion in European circles since the 1980s. A proposal that was prepared in 1988 ended up never being presented by the Commission, in a kind of ex ante censorship, such is the deterrent effect of unanimity. In 2011, a proposal was formally adopted; ministerial meetings would subsequently throw in the towel. On 25 October 2016, the Commission put forward a new proposal (COM(2016) 685 final) (see EUROPE 11647/1). The text is still waiting patiently on the Council’s table to be adopted.
The recent saga of the tax on digital services targeting the Internet giants will be familiar to our readers. The Commission’s proposal (COM(2018) 148 final of 21.3.2018) was moderate yet innovative and well argued (see EUROPE 11970/5 and 11982/2). It very quickly came up against great scepticism, if not outright opposition, from most of the delegations. The MEPs were furious when the plans finally came unstuck at the plenary session of December 2018 (see EUROPE 12158/15). It was replaced by a Franco-German proposal covering the bare minimum (see EUROPE 12210/12). It was not successful. At the Council of 12 March of this year, the dossier was put on ice pending developments in the work of the OECD (see EUROPE 12212/6). This will obviously have increased the EU’s prestige…
As for the financial transactions tax (FTT), this only needs to be adopted by ten member states (involved in the enhanced cooperation referred to in part 1), but they have still not managed to agree. Unanimity strikes again. On 3 December 2018, a year after it was shelved, Paris and Berlin expressed hopes of reviving the initiative, proposing to draw inspiration from the French equivalent (see EUROPE 12151/2). The technicians will be back on it.
To end with the most recent example (ECOFIN meeting of 12 February): the idea of a European tax on air transport, supported by Belgium and the Netherlands, with clear ‘climate’ inspiration (see EUROPE 12192/15). It is anybody’s guess what will become of it.
On 15 January this year, the Commission adopted a politically important communication (the inspiration for this editorial), entitled ‘Towards a more efficient and democratic decision-making in EU tax policy’ (COM(2019) 8 final) (see EUROPE 12168/10 and 12172/22). In this communication, it observes that “taxation is the last EU policy area where decision-making exclusively relies on unanimity” and that taxation “cannot deliver its full potential to help preserve and deepen the Single Market and to support inclusive growth across countries because of unanimity”.
There was once a major study into ‘the cost of non-Europe’; the Commission has totted up the cost of unanimity, more specifically the ‘absence of EU action in taxation matters’: €147 billion a year resulting from the VAT gap, €50 billion lost to VAT fraud, €180 billion to the absence of a common consolidated corporate tax base, €57 billion to the lack of a financial transactions tax and €5 billion for want of a tax on digital services. That’s a total of €439 billion a year. Perhaps this bill should be presented to the voting public this May.
In hopes of exploiting the legal bases referred to previously, the Commission proposed a four-stage roadmap to move progressively from unanimity to qualified-majority voting at the Council, a process due to be completed by the end of 2025. This seems a long way off, given the rhetoric that suggests a somewhat pressing need to remedy a situation that is weakening the EU inside and out. But this gradual approach was no doubt a learning progress to ‘sugar the pill’ for various governments.
Unfortunately, they didn’t really swallow the pill: at the meeting of the Council on 12 February, 15 ministers rejected this plan in no uncertain terms and reiterated their commitment to unanimity; only France and Spain unambiguously supported the Commission (see EUROPE 12192/14). As for the Parliament, it too is divided (see EUROPE 12172/22).
Commissioner Moscovici announced that his institution had played its hand before the European elections, to make it a subject in the public debate. Let us therefore approach it with candour. It is often said that Europe does too much, so this is an example of the opposite.
The citizens, in their roles as taxpayers and voters, should be given a little handbook on the lamentable success rates of the ‘tax provisions” set out in the Treaty. Let alone pointlessly tasking a Commissioner who has invested greatly in this. Explaining that in the view of the national governments, a decision-making system that was set in place more than 60 years ago (art. 99 EEC) does not need any modifications, not even cosmetic ones, not now, not in the future, never mind that the context has changed beyond all recognition. Never mind that the ineffectiveness of the method is total and harmful. Never mind that the European Parliament has no say in tax legislation, that all it can do is proffer opinions that stem from considerable intellectual efforts that will simply go to waste. Never mind that the situation is profoundly anti-democratic and treats both the MEPs and those who voted them in with contempt. Oh, and never mind that it costs society and, ultimately, its weakest members, a fortune.
Those within civil society who permanently focus on taxation matters are few in number and lurch from disappointment to disappointment. As for the major multinationals, in particular the GAFA – whose lobbying skills are irrefutable – well, they’re not complaining.
Is there any hope left at all?
In the run-up to the European elections this May, responsible citizens will compare the manifestoes of the political parties, paying particular attention to any proposals they might have to get out of this mess. Will any of them propose an end to unanimity in taxation matters? They would then need to choose the most motivated candidates to meet this challenge.
If they cannot be joint decision-makers, the MEPs can prepare and vote on resolutions, ask questions, take the floor in plenary, set up committees of investigation, raise awareness in the media and engage public opinion. Bringing pressure to bear, relentlessly, for months on end, on the Commission and the biannual Presidencies of the Council. And make things uncomfortable for them if nothing changes.
Is this an argument in favour of persistent harassment? Yes, and it’s one I subscribe to. I would consider it to be morally justified.
Renaud Denuit