MEPs in the European Parliament’s Committee on Economic and Monetary Affairs (ECON) on Thursday rejected the draft own-initiative report by Claude Gruffat (Greens/EFA, France) on creating an economically, socially, and environmentally sustainable European tax system post-Covid-19 (see EUROPE 12678/19). The report received 27 votes in favour, 27 against, and 4 abstentions, which amounts to a negative vote.
“A majority of the members have explicitly expressed astonishing conservatism during this voting session, while the citizens have been facing and will keep on facing major environmental and social challenges over the upcoming months and years”, said Mr Gruffat in a statement. In his view, this is a real “missed opportunity” for elected representatives from the right, the far right, but also for the liberals.
It should be recalled that the report received a mixed reception in the European Parliament from the outset (see EUROPE 12683/21), especially from the EPP. According to our information, the Christian Democrat group was opposed to a report that only dealt with ‘green’ taxation, so a broader title was chosen.
Overall, the text aimed to propose a roadmap for finding the right tax “mix” for the post-Covid-19 economy. This is an issue on which Parliament has never previously taken a position.
The negotiations were difficult, we are told. The Greens/EFA tried to obtain an alternative majority, given the reluctance of the EPP group. In particular, they were able to count on the support of the S&D and The Left groups. Provisions on competitiveness and digitalisation were conceded to the EPP, ECR, and Renew Europe groups. The Greens/EFA group also agreed to limit the language on company taxation, as another own-initiative report on the subject is being prepared in Parliament.
The vote was expected to be close and support wavering. The uncertainty was so great that on Wednesday a postponement of the vote was even considered. The rapporteur finally decided to put his report to the vote as planned on Thursday, bearing in mind that to have a real impact, the text would have to be adopted in plenary before July, when the European Commission is expected to present its ‘Fit for 55’ package, which contains several ‘green’ tax initiatives.
In the end, it was the fact that one S&D member did not vote that tipped the outcome of the vote. Unsurprisingly, the EPP (with the exception of Finnish MEP Sirpa Pietikaïnen), ECR, and ID groups voted against the report. The vote of the Renew Europe group was more scattered (5 MEPs voted for, 2 against, and 1 abstained).
However, a few hours before the final vote, all the compromise amendments had been adopted, with the exception of one, which called on the Commission to publish a roadmap and a toolkit to guide Member States in reforming their tax systems after Covid-19.
This compromise amendment also invited the Commission to launch a comprehensive public assessment, followed by an action plan with legislative proposals, on existing distortions in all tax areas that could prevent Member States from reforming their tax systems. On the chamber’s right side, this provision was clearly seen as encroaching too much on the fiscal sovereignty of Member States.
However, at the same time, a separate amendment tabled by the S&D group was adopted, which reintroduced several of these demands.
All in all, the final draft text put to the vote recognised the need for a fiscal shift and the need for more ‘green’ taxes, such as natural resource taxes, distance-based charges in the transport sector, fuel prices, and taxation on deforestation.
It also commented on the forthcoming revision of the Energy Taxation Directive and encouraged the Commission to propose an ambitious Carbon Border Adjustment Mechanism. It also called for an end to tax exemptions for marine and aviation fuel and for the establishment of a multilateral convention on carbon taxation.
“The EPP, ECR and ID groups keep on ignoring those new realities and this urgent need of tax transition. While the whole world is facing a historic crisis, and while it is of major importance to support the most vulnerable citizens, as well as to deal with both the climate and environmental challenges, those positions are highly regrettable”, deplored Mr Gruffat. (Original version in French by Marion Fontana)