MEPs from the European Parliament’s Subcommittee on Fiscal Affairs (FISC) discussed with several experts on Monday 16 November the role of tax policies in the context of the post-Covid-19 economic recovery.
All agreed that as the pandemic gains ground everywhere, the immediate priorities of governments are - and must remain - to mitigate the impact of the crisis and prepare the ground for a strong economic recovery. Nevertheless, they recognised that there is also a need for more in-depth, long-term reflection on the tax reforms to be undertaken.
For Grace Perez-Navarro, Deputy Director of the OECD’s Centre for Tax Policy and Administration, there is no “one-size-fits-all” solution, but certain aspects, such as combating tax fraud and evasion, using tax tools to combat climate change and reviewing labour taxation, should be avenues to be explored further.
“Tax, not austerity, must pay for the recovery”, said Liina Carr, Confederal Secretary of the European Trade Union Confederation (ETUC).
According to her, the two main objectives must be to increase tax revenues in a progressive and sustainable manner and to influence corporate behaviour towards greater sustainability. Among the avenues to be considered, Mrs Carr mentioned a tax on billionaires and the introduction of a minimum effective rate of 25% for corporate tax.
For his part, Joaquim Miranda Sarmento, professor at the University of Lisbon, advocated using some EU funds to temporarily reduce taxes, for example for the economic sectors most affected by the pandemic (tourism, services, airlines, certain industrial sectors) as well as for the families most affected by the crisis. The temporary reduction of the VAT rate for certain sectors is, in his view, also a good strategy.
In the long term, Mr Sarmento believes there is a need to better combat tax evasion and fraud and to tax digital services, carbon and financial transactions.
Asked by MEP Marek Belka (S&D, Poland) on the taxes that would be the easiest to implement at European level and the most efficient, Grace Perez-Navarro recalled that it is always easier to adjust existing taxes than to introduce new ones.
According to her, the focus should be on taxes related to the environment and climate change, in order to have a sustainable recovery. It could, for example, be considered to make government financial support in the context of the crisis conditional on the development of more environmentally friendly activities, she said .
Manon Aubry MEP (GUE/NGL, France) regretted that the experts “didn’t propose anything new” and questioned them on the possibility of an exceptional tax on companies that have made extra profits thanks to the health crisis, such as Amazon or certain pharmaceutical companies.
According to Grace Perez-Navarro, temporary levies, solidarity levies or taxes on “super profits” are indeed solutions that could be considered as answers to the crisis.
This exchange of views will feed into the future work of the FISC subcommittee, which has planned to prepare a non-legislative report on the creation of a sustainable European tax system in the post-Covid-19 economy. (Original version in French by Marion Fontana)