Ministers from EU Member States displayed their division on the need for fiscal convergence at a debate on the future of the internal market and industry at the Competitiveness Council on Monday 27 May.
The issue did indeed emerge throughout the interventions in connection with the draft conclusions presented by the Romanian Presidency of the EU Council (see EUROPE 12262/5), with, on the one hand, a group of Member States – such as Spain, Portugal, Germany and France – in favour of more ambitious wording on the issue of taxation. France was the most explicit Member State on the subject. “Tax dumping is another sophisticated way of paying state aid, you must not be fooled”, said French Secretary of State Agnès Pannier-Runacher. “The internal market must not be seen as a breeding ground for unfair competition between Europeans”, she warned.
In contrast, the United Kingdom, Ireland, Cyprus and Malta clearly opposed the introduction of the reference to tax. Malta has been very clear here. Why are we raising tax matter here?” Maltese Minister Christian Cardona asked his counterparts, who insisted that discussions on this issue should remain confined to the Economic and Financial Affairs Council (ECOFIN). He recalled the importance of taxation to “steer an economy”, once again expressing his disagreement with the move to a qualified majority on tax matters. It should be noted that Cyprus, Malta and Ireland are tax havens (see EUROPE 12209/13).
Due to the sensitivity of the issue, the Romanian Presidency found a compromise and included a wording from the European Council conclusions in its text (§1, paragraph 2), namely: “additional measures should be taken to deepen the capital markets union and to ensure fair and efficient taxation”.
Tax harmonisation is being discussed within the Organisation for Economic Co-operation and Development (OECD), in particular to address how to tax the digital economy at international level and how to establish an effective global minimum corporate tax rate (see EUROPE 12262/14).
Batteries
Another topic that seemed to be a source of discussion was the method for developing the European Union's strategic value chains. Here, the example of the Battery Alliance (see EUROPE 12246/9) has been on many lips, praised by Belgium, Germany, France and Spain. Addressing the issue of important projects of common European interest (IPCEI), Spain has even requested more funding for these European projects in the future. Belgium has expressed its interest in extending the battery project to other sectors, echoing the Commission's proposals to support sectors such as connected vehicles, smart health or low-carbon industries.
However, here too, some Member States, mainly in Central and Eastern Europe – such as the Czech Republic, Poland and Lithuania – have stressed that it is better to create the conditions for a strong European sector in strategic areas than to support specific companies or Member States.
Consensus
In contrast, there was consensus on other subjects. First of all, the need to support the European industrial fabric, starting with SMEs. Many Member States have stressed the need to better protect European industry and companies on the international stage. Some insisted on strengthening the principle of reciprocity and access to other non-Member State markets. Others, such as France, stressed the need to reform the World Trade Organization. Ministers also agreed to simplify the current governance between the different fora and stressed the importance of strengthening the cross-cutting nature of the industrial issue.
In general, Member States have taken up a position in favour of reducing regulatory and non-regulatory barriers, particularly in the services sector, by strengthening coordination between Member States and the implementation of current rules. Luxembourg seemed to denounce a certain hypocrisy on this point, being surprised at the “gap between words and deeds” and noting the multiplication of derogations in European regulations. Similarly, the Commissioner for Industry and the Internal Market, Elżbieta Bieńkowska, recalled that Member States had abandoned the Commission's proposal to introduce an electronic service card (see EUROPE 11995/6), which she said was intended to facilitate the development of cross-border activities in the services sector.
This policy debate will aim to guide the next European Commission in developing the industrial strategy for 2030 – which should be presented by the end of the year – and a renewed strategy for the single market in March 2020 (see EUROPE 12220/3). (Original version in French by Pascal Hansens)