Researchers and economists Manon François, Carlos Oliveira, Bluebery Planterose and Gabriel Zucman have raised the idea of targeting the stock market capitalisation increases of companies that benefit from extraordinary circumstances, such as energy companies after the invasion of Ukraine in February 2022. In a working paper published on Friday 30 September, these members of the European Tax Observatory propose a solution to the currently debated issue of taxing super-profits (see EUROPE 13017/14).
In their view, stock market capitalisation is easily observable and makes the tax much more difficult to avoid than standard taxes on excess profits. This would allow rents to be captured regardless of where multinationals book their profits.
Their proposal targets companies that are headquartered or have sales in the European Union. By applying this tax to both EU and non-EU companies, to the extent that they benefit from the common market, the mechanism would ensure a level playing field between EU and non-EU companies.
This tax would affect 299 companies. In September 2022, the 299 energy companies included in the analysis had a total stock market capitalisation of $7.4 trillion, an increase of $1.6 billion since January 2022.
According to the experts’ calculations, a capital gains tax on energy companies from January 2022 to September 2022 at a rate of 33% would generate around €80 billion in revenue, or 0.4% of the EU’s GDP. This €80 billion is three times more than the €25 billion expected from the European Commission’s proposed solidarity contribution (see EUROPE 13032/4).
This tax would also prevent the transfer of profits to tax havens, as stock market capitalisation is much more difficult to manipulate than profits.
According to the authors, this tax would also be fairer. Taking into account their calculations, if the revenues from the tax were fully and equally redistributed to households, each European inhabitant, including children, would receive about €180. A family of four would receive just over €700.
Finally, the authors propose that the tax be collected by the European Commission and used for EU own resources, or by the tax authorities of each Member State. In this case, the allocation of the market valuation gains of non-resident multinationals would be done by the tax authority of each Member State.
To read the European Tax Observatory’s document: https://aeur.eu/f/3cy (Original version in French by Anne Damiani)