Taxation and customs policies and the Lisbon Strategy (debate) 
President
The next item is the report by Sahra Wagenknecht, on behalf of the Committee on Economic and Monetary Affairs, on the contribution of taxation and customs policies to the Lisbon Strategy.
Sahra Wagenknecht  
rapporteur. - (DE) Mr President, ladies and gentlemen, the question as to whether the Member States' taxation policy actually helps to promote growth, employment and innovation at present can unfortunately be answered in very few words: it does not! Growth is simply not promoted by abandoning to free fall the tax rates of highly profitable conglomerates in a Europe-wide dumping race and in return demanding cash increasingly forcefully from average wage earners, the unemployed and pensioners in their capacity as consumers.
Growth is not promoted by subjecting income from employment to a tax rate that is several times greater than that applied to income from assets, thereby making the gap between them ever wider. Employment is not promoted when small investing enterprises are taxed disproportionately more than those tinkering speculatively in shares, bonds and financial derivatives. Innovation is certainly not promoted as long as multinationals with gilt-edged balance sheets are able to stash away the best part of research and development funds in their accounts, while those who are actually targeted for this kind of benefit are left out in the rain.
In brief: a socially balanced perspective and development is certainly not being promoted in the EU, but is virtually being stalled while those rolling in money are being treated to more and more tax breaks and fattened up even more while those who already have little are having to dig ever deeper into their pockets. This kind of taxation policy is fatal in terms of economic policy, counterproductive in terms of growth policy and catastrophic in terms of social policy.
I know that the structure of national taxation systems still lies, of course, within the sovereignty of the Member States on paper, but the reality is somewhat different. The lack of EU-wide coordination actually means - even in the direct taxation sector - that national taxation systems are increasingly no longer designed at all on the basis of policy, but are formed and moulded by the ice-cold system of tax competition. This system can involve a simple denominator: the more mobile a factor, the greater its potential for extortion against national fiscal services and the more sweeping the tax relief, of course, which it is able to enforce itself.
If government revenues are not to dry up and run out completely in this process, the sectors not able to escape taxation at all, or only with difficulty, must be taxed even more heavily almost as compensation. Taxes are therefore shifted - from corporate profits to private income, and then from investment income to labour income, which is even less mobile, within income from highly paid employment to less well paid employees, who are also correspondingly less mobile, and generally from income and assets to consumption. The fact that this process is in force - and has been for years and decades - can be very clearly demonstrated by the data on tax receipts and taxation rates in the EU. Not only the legal tax rates but also the actual tax rates on corporate profits in the EU have fallen in the last decade by over 10 percentage points. All the studies carried out on this subject confirm this.
The highest tax rates have been reduced virtually everywhere in the EU Member States. In more and more Member States private investment income is given much greater preference over income from employment because of the transfer to dual tax systems. Excise duty is increasing ever further - on the one hand because of 'eco-taxes', which often enough have no ecological steering effect at all even in the absence of alternatives, but which quite frankly fleece budgets, and on the other hand because of the fact that value added taxes are constantly increasing and in more and more countries are approaching the top end of the agreed range.
Such a development is no accident. It is the direct result of unchecked tax competition on a uniform internal market. It should already be leading us to believe that the upward trend of corporate taxes within the EU is broadly eclipsing those in the whole of the OECD. This means that tax rates here have clearly fallen more than in the OECD as a whole.
This also clearly shows that the many pressures of globalisation much and happily complained about are not taking effect here, but that there are home-made pressures created within the EU and therefore also pressures that could very easily be discreetly overcome if there was a desire to do so. Very appropriately my original report included the call not only for a common consolidated corporate tax base, which it does, of course, support, but also for EU-wide minimum tax rates on corporate profits, which should no longer be exceeded by any country thereafter. Only minimum tax rates of this kind actually offer the opportunity to stop the upward trend in corporate taxes somewhere along the way.
My report included the call for stronger EU-wide taxation of assets and financial transactions, the call to relieve labour income explicitly in the lower and middle classes and finally the call to reverse the fatal trend of transferring direct taxes increasingly to indirect taxes and reinstigate the counter-trend.
Only a fraction of all these calls have unfortunately been retained after the vote in the Committee on Economic and Monetary Affairs. Instead, my report bursts into a song of praise for tax competition in complete ignorance of the fatal consequences of this supposedly healthy tax competition for the revenue side of EU budgets and therefore for the situations in which millions of Europeans also find themselves. Such changes made to the report unfortunately show very clearly whose interests are in fact close to the heart of the majority of members of the Committee on Economic and Monetary Affairs and especially those of the Group of the Alliance of Liberals and Democrats for Europe and the Group of the European People's Party (Christian Democrats) and European Democrats, because it is very obvious who profits from the prevailing tax regimes in the EU.
We have now once again put forward our most important requests as amendments in plenary. Should they fail to secure a majority there too, my group will vote against the report. Another taxation policy in the EU that minimises the social contrasts instead of constantly reinforcing them - as the present taxation policy does - would indeed be possible and would be demanded as a matter of urgency. This would, however, imply that the prevailing policy in the European Commission and also in the individual Member States does in fact consist of considering the interests of the majority of Europeans according to their guiding principle, instead of serving as they have done to date as executors of the interests of the élite of society. It will simply give rise to even greater parliamentary and extra-parliamentary pressure.
We shall continue to strive precisely against this pressure so that eventually the inexpressible rhetoric of socially intolerable relationships - which characterises most reports and which also now characterises this report on taxation - is no longer capable of winning a majority in this House either.
László Kovács
Member of the Commission. - Mr President, I am really pleased to be able to discuss with you the contribution of taxation and customs policy to the Lisbon Strategy.
A major priority of the European Union is to improve its competitiveness while preserving its social model. Taxation policy has a major role to play in helping to achieve growth and employment objectives. I welcome the essential message of your report, which is one of support for the Commission's initiatives in the tax area. In particular, it encourages increased efforts concerning the Common Consolidated Corporate Tax Base (CCCTB), the home state taxation pilot scheme proposal, the strategy ensuring better coordination of Member States' tax systems particularly in the field of exit taxation and cross-border loss relief, the work undertaken by the joint transfer pricing forum, the strategy to combat tax fraud, the VAT package, the reduced VAT rates on labour intensive services and environmental taxation.
All these files are extremely important. They are the core of the Commission's approach to tax policy and many of them have been discussed in several committees of the European Parliament. It is clear that European companies deserve a system of corporate taxation adapted to the degree of their actual and potential economic integration at the scale of their cross-border activities in Europe. This is one of the keys to their future competitiveness. It is also essential that other direct tax obstacles find a solution by coordination and not only through costly litigation.
There is only one area where I cannot follow you. This is in paragraph 17 of the Wagenknecht report, as it stands now, where it asks for the suppression of minimum rates for excise duties and the replacement of current Community legislation in this domain by a code of conduct. We discussed these elements in this House when dealing with the proposal on alcohol taxation and, with all due respect, I have got to say that the Commission has not changed its mind.
Community legislation on excise duties in general has an important role to play in order to reduce distortion in the internal market, to protect public health and to gear consumption patterns towards more environmentally sustainable behaviour. The Commission strongly believes that minimum rates are necessary for the proper functioning of the internal market by providing a safety net for Member States which ensures that all Member States actually apply excise duties and that the levels are meaningful. I hope that the tabled amendment which aims at changing paragraph 17 will be endorsed by a majority of Members.
I would like to conclude with three messages. Firstly, you all know that my services are working very hard to table a legislative proposal on the CCCTB which I intend to present to you after the summer break in 2008. Secondly, in the VAT field, the Commission fully supports the Portuguese Presidency in its efforts to reach agreement on the VAT package and also to advance substantially the broader debate on VAT rates before the end of the year. We can also work to ensure adoption of the proposal for prolonging certain derogations in new Member States on reduced VAT rates. In addition, we will continue our intense efforts to combat VAT fraud and we will soon come forward with a proposal on the VAT treatment of financial services that will provide the sector with more legal certainty and with modernised rules. Thirdly, we remain committed to a system of minimum rates in excise duties in order to reduce distortion and to promote fair competition in the internal market to contribute to the protection of public health and to the environment.
Piia-Noora Kauppi
on behalf of the PPE-DE Group. - Mr President, sometimes, in this Chamber, we cannot really see the political differences between groups, but, on this issue, the difference is very visible, because I could not disagree more with the rapporteur on some of the points she just mentioned. I respect the work she has done on this report, but on this issue we have totally different views on what should be done by the Commission.
First of all, this report is about the Lisbon Strategy and what we should do to restore Europe's global competitiveness. This is really the only way to guarantee European welfare and the welfare of our citizens. Without taxation, this is impossible. Taxation has a crucial role to play in this respect, in bringing competitiveness to Europe.
We must remember that overall tax levels in Europe are still above the OECD average. In order to achieve a lower level of taxation in Europe, we need to create an environment conducive to investment. We need more investments, more growth, and more, flourishing businesses in Europe.
Healthy tax competition has a beneficial role in this respect. This is an economic, market-based control mechanism against rampant political decisions. If we have fruitful tax competition in Europe, governments cannot put obstacles in the way of the single market. That is what we want: a genuine single market without tax-made obstacles. On the other hand, there is no evidence that fruitful tax competition would erode tax bases. The total tax revenue has remained remarkably stable, thanks to increased economic activity.
However, the existence of 27 different tax regimes creates problems, particularly for European SMEs, which are so important to this growth. According to a 2004 EC taxation survey, compliance for small SMEs costs about 2.6% of their sales and 31% of taxes paid. So, one third of all the tax goes to compliance. The high proportionate amount of tax compliance for small companies is a big obstacle, and that is why we need to do our best to call for cross-border loss relief, simplified customs procedures, one-stop-shop schemes for VAT, home states taxation pilot projects and so on. We support everything that the Commission has done in this respect.
Finally, industry wishes to see a well-managed and simple tax administration system. We need to resolve the problems of transfer pricing, loss offsetting EU-wide and avoiding double taxation, and to lower our compliance costs. We welcome the Common Consolidated Corporate Tax Base (CCCTB) proposal, and the fact that the Commission is stable and brings us the proposal on CCCTB, because loss-relief is only a temporary thing. In the end, we need a consolidated corporate tax base.
Katerina Batzeli
on behalf of the PSE Group. - (EL) Mr President, Commissioner, Mrs Wagenknecht had the initiative to draft a report, which is proof of the political courage it took to highlight the redistributive and social dimension of taxation policy. This document is one of the more important pieces of evidence showing that the debate on taxation policy may become Europe-wide.
The commitment to meet the Lisbon targets, the rules of the Stability and Growth Pact, the obligation to administer and redistribute tax revenue so that it meets cohesion and employment objectives, and the completion of the internal market - all these are proof enough of a political aim. The taxation policies of Member States can no longer be based exclusively and solely on national criteria: dialogue on taxation is becoming necessary to promote greater tax coordination throughout Europe.
Given such a dialogue, which has enabled substantial cooperation between the shadow rapporteurs of all the political groups, we have concentrated on the following fundamental points. Firstly, on the issue of tax competition, we do not believe that the object ought to be to curb the principle of tax competition, for this would be tantamount to censuring the policies of certain Member States. Owing to the lack of common rules on tax policy issues, tax competition with its offers and counter-offers of low tax rates creates problems. As is also the case for the other sectors of the internal market, however, tax competition can ensure competitiveness and improve the productivity of national economies, as well as that of Europe as a whole, provided that the rules curbing the growth of harmful competition obtain.
The second point we focused on was the relation between direct and indirect taxation. A trend has recently been noticed in Member States to increase indirect taxation, in most cases to cover their fiscal deficits. This is a burden for consumers, however, and the market remains unmonitored.
The aim of this report is to find safety measures facilitating a balanced combination of direct and indirect taxes. We are in favour of a revision of the system of VAT and special consumption taxes. This should not mean that it is replaced by a code of conduct not binding on all the Member States.
Commissioner, we are aware of the efforts of the Commission and the problems at Ecofin. Nonetheless, we as members of the European Parliament must above all closely cooperate with national parliaments to debate this major fiscal policy.
Margarita Starkevičiūtė
I would also like to stress the importance of this report as the strategic line we should follow in making reforms in the economies of the European Union. Regretfully, the representatives of Portugal are not with us today, when we are discussing this very important issue.
What are the main points of our report? The main point is that in view of changes in the economic environment we must carry out an overhaul not only of our plants and enterprises, but also of the instruments of our fiscal policy. When referring to the Lisbon Strategy, we usually speak about expenditure policy; very rarely do we consider taxation policy. Without paying due attention to taxation policy we would not be able to achieve the Lisbon objectives.
What issues are to be considered? First of all, it is necessary to look into the ways of distributing the tax burden between the producer and the consumer. Moreover, we cannot ignore the fact that there is one more group of people - those living on capital income. This is known as private equity.
How do we distribute the tax burden? This is one of the challenges presented by the new economic environment. Another very important question is: how do we encourage structural reforms? Structural reforms cannot be implemented without introducing new enterprises, as people are not able to leave their existing jobs for new work places, which could create grounds for social discontent. New enterprises can be created only with beneficial taxation conditions. This is one of the main points of our document.
The issue that needs to be considered is: what level of tax policy coordination is needed among the Member States? We are in favour of competitive taxes and we do not support the idea of introducing minimum rates. This is because each country has its own specific economic structure and national expenditure policy. Taxation policy must be in line with expenditure policy, but we are definitely in favour of the coordination of tax base policy and support the Commission on that matter.
Heide Rühle
on behalf of the Verts/ALE Group. - (DE) Mr President, I emphatically agree with Mrs Kauppi. The disagreements between the groups here in the European Parliament on the subject of taxation policy are becoming clearer and clearer. We must give this debate much more serious attention over the next few months. I should like to thank the rapporteur and shadow rapporteur for the significant effort they have made in order to bring this report to a good conclusion.
A good conclusion - but not for us. As a Group we shall not be able to accept this report in its final form. It has some pleasant aspects, for example it describes and demands the important step towards a consolidated tax base for corporate taxes. This is an important first step. However, this must be accompanied by similarly clear declarations as regards harmonising minimum tax rates, because otherwise it will lead to unchecked tax competition, specifically in this area.
We also see problems under Article 17, where the committee has unfortunately clearly stated that it is against minimum tax rates for excise duty. This, too, is unfortunately in line with the votes of recent weeks and we greatly regret this. We support the group here. We believe that we have to achieve harmonisation in European excise duty and that this harmonisation must be strengthened, if anything, because otherwise we will have unchecked tax competition in excise duty.
We also think it is a problem that far too little is being said on the subjects of climate change and eco-taxes. I, too, wish to disagree with the rapporteur here. I believe that eco-taxes are an important instrument for meeting these challenges of climate change. We have to do much more in this respect.
I do, however, think that the approach of focussing on nuclear energy here, or on 'clean' forms of energy, is wrong. It is important that we focus clearly on energy saving and energy efficiency. These are the important answers. When we look at the challenges facing us in the refurbishment of buildings and in the field of transport, it seems that we can genuinely meet the Kyoto aim of energy saving if a great deal more is done here.
Tax policy can make an important contribution to achieving greater energy savings and, greater energy efficiency and to genuinely meeting the challenges of climate change. Unfortunately, this report does not reflect this position. As I have already announced, we shall therefore not be voting in favour of this report.
Esko Seppänen
on behalf of the GUE/NGL Group. - (FI) Mr President, Commissioner, our group endorses Mrs Wagenknecht's views in this matter, even if they are in conflict with the opinions of the majority on the Committee.
The European Union will not be the world's leading knowledge- and technology-based economy in 2010. It is not, however, due to tax systems, which have continually been reformed in ways that favour big companies, that the target under the Lisbon Strategy is unrealisable. Big companies choose transfer pricing and finding of a home for their capital as options enabling them to avoid tax. In this they are aided by the tax havens and offshore financial centres operating in the Member States of the EU, both blots on the EU's moral landscape.
According to the rapporteur, the Commission in its communication does not consider the effects of taxation on income distribution. The system of flat tax which some Member States apply favours those on large incomes, while progressive income tax promotes social equality. The Lisbon Strategy cannot be implemented in a manner which would eat away at the financial basis of the welfare society and which would be grossly unfair.
Derek Roland Clark
on behalf of the IND/DEM Group. - Mr President, it says this is a contribution, but it is more like a recipe, a recipe for the harmonisation of yet more taxation, which I quote here and there from the report: '27 different tax systems' are an 'impediment'; 'coordination of Member States' fiscal policy'; 'calls on the Member States to ... ensure greater fairness in the distribution of the tax burden'; 'supports' the Commission in gearing 'fiscal policy towards ... environmental objectives'; 'increase in fuel taxes'; 'establish a pan-European ... corporate tax base'. In short, it is back to the failed policies of the 1970s.
In any case, even the British cannot get it right for all of our country. North is not the same as the south, Wales and Scotland are different to the south-east - and that was under Gordon Brown as Chancellor for 10 years. Surely you listened to him; after all, you did at Lisbon last week when, as Prime Minister, you let him keep the red lines, did you not? Or did you?
Later in the report, it talks about 'EU-wide coordination' of 'direct taxation'. In the UK, we thought we had been promised that harmonised taxes, especially income tax, would never come. Now, here it is in a report. It is a bit like the Reform Treaty. Gordon Brown keeps on saying it is not a constitution, when all the EU leaders say it is: Valéry Giscard d'Estaing, José Luis Rodriguez Zapatero, Angela Merkel, even our own President of President said so in this Chamber a short while ago.
So why do you not get Gordon Brown to tell the truth to the British people? Harmonise that message! Now, that is harmonisation I would go along with. But you dare not do that to the British people because, when they are told the plain unvarnished truth, they will vote with their feet, right out of the EU, taking their annual EU contributions of EUR 18 billion of their own taxpayers' money with them. What price harmonised taxes then?
Petre Popeangă
on behalf of the ITS Group. - (RO) The importance of reviewing the contribution that the fiscal and customs policies could bring to the development of the Lisbon Strategy cannot be questioned. For this reason, but not only, the objective of the document we examine today, namely the Wagenknecht report, to evaluate the contribution of policies applied to the fields specified for achieving the Lisbon Strategy objectives, is salutary. It could not be otherwise, since the Lisbon Strategy proposes generous objectives, such as promoting economic growth and designing policies that would allow European companies to create more and better jobs. Nevertheless, reading the report, I was surprised, as a citizen of a recently acceded country, at the impression that it addresses a Union made up only of countries with developed economies, or rather, with equally developed economies, which is not true. It is very probable for some of the measures proposed not to have beneficial results for the less developed economies, taking into account that the general laws of the single competitive market favour strong economies, to the disadvantage of the weaker ones. Due to lack of time, I will not expand on this subject, but I consider that, in order for the report's objectives to have beneficial results in the economies of all 27 countries, not 25, as specified in the text, it is necessary to perform the comparative review of their economies and, according to the results, to adopt a set of actions that would create equal conditions for developing the effects proposed by the project.
Eoin Ryan
on behalf of the UEN Group. - Mr President, the report on the table today demonstrates, once again, the relentless attack on Member States that operate low and successful corporate tax regimes. I do not accept that low corporation tax leads to unfair tax competition. I believe that ensuring competitiveness is a vital element in the tax policy mix of a fully functioning single market.
Where is the Commission's evidence to prove that CCCTB will not hamper EU competitiveness? Where is the proof to say that it will benefit EU competitiveness? Why is it that countries with low tax, low unemployment and high growth are being attacked by the Commission? I do not understand it. It is absolutely farcical for the Commission to say that setting a tax base will not eventually set a tax rate, because that is already what the larger Member States are saying. It does not stand up to any kind of scrutiny.
Attempts by large Member States to giftwrap tax harmonisation in the flowery paper of CCCTB will not be accepted by Ireland or other Member States. The fact of the matter is that it is not the right of Ireland, or any other Member State, to play a role in setting the tax rate of another Member State. The unity of Europe is not compromised by diversity in tax policies; rather, the EU's competitiveness is undermined by the wrong tax policies. I firmly believe that the EU is best served by promoting tax competition, not tax harmonisation.
How is it that a country like Ireland, and other Member States, which changed radically their tax policies and became successful economies, are now under attack? What is the attractiveness of a country like Ireland, Commissioner, if you bring in this system and eventually bring in tax harmonisation? Because that is exactly what it is, and the only way tax will go is up. It has already been said, by people within the Commission, that they want to see a tax regime more or less in the middle of what it is at the moment, which is approximately in the low 20%. What would be the attractiveness of Ireland or other peripheral countries? There would be not attractiveness, just high unemployment in the long...
(The President cut off the speaker)
Gay Mitchell
Mr President, the report we have in front of Parliament today rightly states that tax competition in the EU has led, and continues to lead, to EU-wide economic gains by way of a dynamic corporate environment.
The CCCTB could just as easily lead to a less competitive EU and should not be supported, in my view. The EU needs to be responsive to an ever-changing global economy. Modern competitive economies need to be flexible to meet the changing requirements of new products and services. The CCCTB will undermine this flexibility for a number of reasons. An EU-wide corporation tax base will be inflexible and hinder an individual country's ability to decide its own legal fiscal strategy, based on its particular circumstances. The CCCTB's proponents assert that each Member State will retain its autonomy to determine its national tax rate - but will they? Is the CCCTB not the thin end of the wedge?
If the CCCTB is optional, it merely increases the number of bases available to companies and makes the system even more complex. Domestic tax law offers certainty to business. A system that is applied in a number of Member States may lead to differences over how the provisions are interpreted, bringing about uncertainty for business.
In the remaining time available to me, I can simply make some bullet points. First, taxation is a matter of national sovereignty for each Member State. The right to choose the level of public spending and the funding of such expenditure is a basic function of national democratic process. It is necessary to protect the flexibility of tax policy in rewarding enterprise and the creation of jobs and growth in the economy. A single base would do away with flexibility. There is no evidence to suggest that a common consolidated corporate tax base will address issues such as competitiveness, compliance costs for companies, transfer pricing and so on. It would not simplify EU tax issues, as the so-called 'optional system' proposed would add another layer, as I have just said.
The harmonisation of the tax base would lead to pressure on national tax rates. Such harmonisation will only increase the attractiveness of non-EU corporate locations. The Code of Conduct on business taxation addressed harmful tax competition. Different tax rates in EU Member States are not harmful.
I would ask the Commissioner, when he brings forward these proposals, as he suggests, next year, to please bear this in mind. Member States like Ireland have already given...
(The President cut off the speaker)
Pervenche Berès
(FR) Mr President, Commissioner, ladies and gentlemen, firstly I would like to thank our rapporteur here, for the quality of the work she has done and her efforts to come up with a text that, unfortunately, she does not seem totally satisfied with.
Taxation is clearly an essential complement to the construction of a true internal market, if you want the market to be more than just a free-trade area where any form of tax and social dumping is permitted. The completion of the internal market therefore requires the harmonisation of certain rules on taxation and in the first place calls for the creation of a Common Consolidated Corporate Tax Base. The report put before us today opens the door to this, and I am pleased about this. I note that a number of fellow Members are very actively against this plan, in the name of what they describe as 'fair' competition.
Personally I believe that free, undistorted competition - and I am not a frenzied advocate of this type of competition - requires a certain amount of transparency as regards the rules. I am surprised that countries that have benefited from massive contributions from the European Union, in the name of solidarity, are today rejecting this step, which would be an important step forward in terms of solidarity, competition and transparency.
Taxation is also a formidable tool that the EU must use if it is to implement its chosen strategies, because it does not have all that many tools. It can have a positive impact on the cleanest energies or to achieve...
(The President cut off the speaker)
Olle Schmidt
(SV) Mr President, this is a report that is heavily influenced by the compromise between the PPE-DE and the ALDE. I believe it is largely a balanced report. The Member States' responsibility for taxation policies is laid down, whilst there are a number of taxes that would benefit from greater EU coordination. In the rapporteur's original proposal, there was thorough coordination with a strong emphasis on higher levels of redistribution. That cannot be a way to make Europe grow or to create new jobs. In the globalised world in which we live, it is not higher taxes that Europe needs. Instead, I think that we who live in high-taxation countries should look at other models, such as a flatter tax. In general, taxes should be lowered on work and raised on harmful consumption. For example, specific environmental taxes should be introduced, as well as reasonable excise duties on alcohol and tobacco, for example, as the Commissioner says.
Here the EU must be able to act with greater accord. This is a politically sensitive issue - we have heard that here and I am well aware of it - but it is nonetheless necessary, in my opinion. If we are to resolve the major climate and energy challenges that we are facing, it would be irresponsible of us to rule out controlling fiscal instruments. It is possible to achieve high growth, with high environmental and energy taxes, and at the same time reduce the overall tax burden. Any doubters can look at the policy of the centre-right government in my home country, Sweden, if I can be allowed to be a little patriotic at the end of this debate.
Zbigniew Krzysztof Kuźmiuk
(PL) Mr President, Commissioner, in taking the floor in a debate devoted to the impact of taxation and customs policies on the implementation of the Lisbon Strategy, I would like to draw your attention to the fact that some of the suggestions relating to the Member States' tax systems that are contained in Mrs Wagenknecht's report will not have a positive impact on economic growth and employment in EU countries.
Firstly, moving away from tax competition and attempts to standardise solutions in the area of corporate income tax run counter to the principle of tax sovereignty for EU Member States.
Secondly, lowering corporate tax rates while simultaneously doing away with any associated tax relief will not just fail to bring about a reduction in budget income from this tax; it will, in fact, increase it substantially. This is confirmed by the situation in my country, Poland, where the corporate tax rate has been substantially reduced, yet receipts from this tax are greater with each year that passes.
Thirdly and finally, in this situation I consider the report's suggestions relating to coordination and tax systems, including direct taxation, to be hazardous steps that will certainly not help to implement the Lisbon Strategy.
Zsolt László Becsey
(HU) Thank you Mr President. What are we talking about? One of the key issues is whether we are a match - in terms of competitiveness - for the external tax competition, in other words for tax competition from outside the European Union, and we should not be looking for scapegoats within the European Union. Otherwise, as several of my colleagues have stated, capital will leave the whole of the EU. What do we agree with in this taxation policy? We agree that it should facilitate job creation, in other words promote labour; we agree that we should help small and medium-sized enterprises, since these enable people to remain where they are, they help to reinforce families, and also to create jobs. I also agree with its social policy measures, which will help tackle the demographic challenge in the European Union.
What do we disagree with? We disagree with over-taxing ourselves in areas relating to health, the environment or social policy instead of pursuing an anti-inflationary policy and seeking to respond appropriately to the challenges of competition. The other thing that we must bear in mind is that the European Union has expanded and become highly heterogeneous. We expect everyone to maintain budgetary discipline in their independent fiscal policy, but at the same time we want to minimise the instruments for doing this. If convergence is our primary goal, then in indirect taxation for example, such as excise duties, if we are to get anywhere, we should be obliging not only countries operating at around the minimum rate to achieve convergence, but also countries that apply much higher rates. This is why in several instances we have proposed replacing the current approach based exclusively on a minimum rate of excise duty by some kind of 'code of conduct' steering Member States along the same path. As regards common capital or the common tax base, I would like to say this: it would be a serious problem if this entailed punishing competitive countries, if the minimum rate were to be introduced. I am also apprehensive about what will happen as regards movement of capital when the common tax base is established. Will it not mean that profits from subsidiaries in the new Member States, for example, will constantly be reclassified in the accounts as profits of the parent company instead of being invested locally? Combating fraud is also very important, and I wish the Commission good luck with this. It is on the right track, since the most important thing is to regularise the black economy and take steps to combat crime. Thank you very much, Mr President.
Dariusz Rosati
(PL) Mr President, the main aim of the Lisbon Strategy is to increase the competitiveness of national economies. A high level of competitiveness enables economic growth to be accelerated and new jobs to be created, and makes it possible to fund important social aims. Unfortunately the current tax system in EU Member States does not favour implementation of the Lisbon Strategy. The burdens placed on employment law and economic activity are too great, tax rates are too differentiated, and the regulations are too complicated. At the same time the tax system is burdened with an excessive number of functions and tasks - economic, fiscal, social or environmental.
For taxes to aid competitiveness, they must above all create incentives to work, to develop economic activities and to innovate. To this end taxes, especially direct taxes, should be set at a moderate level, avoiding unnecessary differentiation of rates and excessive progression. Since direct taxes exert a stronger, negative impact on production and employment, we must make greater use of indirect taxes when planning budgetary income.
In relation to the debate, Mr President, I wish to express my concern that there is too much ideology and politics, and too little real economic knowledge. The best example is the concepts that are used here, such as fiscal dumping or social dumping. There is no objective standard for taxation, and it is therefore not possible to accuse those states that apply low company taxation levels of fiscal dumping.
Konrad Szymański
(PL) Ladies and gentlemen, I would like to start by congratulating the Committee on Economic and Monetary Affairs on a difficult and fundamentally successful operation to introduce the necessary amendments to the initial text, which was the original address.
Initially it was being suggested to us not only that the European Union should get involved in establishing the principles of corporation tax, but also that these taxes should be raised, against world trends. It is a good thing that we have avoided this. For similar reasons we should take a critical view of the support evinced in the text for tax base harmonisation. A Community tax base is a blow to tax competition in the EU, with all the associated negative consequences. Its introduction would limit Member States' efforts to optimise corporation taxation against the Lisbon targets. In political terms this would burden the EU, which, in its own properly conceived interest, should refrain from trying to influence the shape of tax systems in Europe.
László Kovács
Member of the Commission. - Mr President, this debate has been very interesting and most of the contributions have been encouraging. Like you, I am persuaded that our efforts to dismantle tax barriers in the internal market are worthwhile sustaining. I am particularly grateful for your support concerning the important project of the CCCTB and I look forward to your forthcoming own-initiative report on the common base. As far as some of the critical remarks are concerned, I intend to send a personal letter to those honourable Members of Parliament who have expressed their objection, which I appreciate. It would be fair to answer them in written form as I do not want to take too much of your time.
I am pleased that most of you share my view that taxation policy has a major role to play in attaining many of the EU's policy objectives, and in particular growth, employment, competitiveness and sustainability. Thank you for your attention and for your support.
President
The debate is closed.
The vote will take place tomorrow at 12 noon.
Ladies and gentlemen, I would like to thank many people for keeping within their time and also thank everyone, I hope, for their understanding, which has enabled us to close the debate five minutes early and therefore to be able to listen to everyone, instead of what happens on other occasions, when before an important debate or a vote we are unable to listen to what our colleagues have to say.
Written statements (Rule 142)
Gábor Harangozó  
in writing. - We all ought to agree that the simultaneous existence of 27 national taxation systems seriously hampers the blooming of the full advantages of our single market. Moreover, there is indeed a genuine opportunity to reinvigorate the implementation of the Lisbon Strategy through EU-wide taxation and customs measures that would make the Union a more attractive place to invest and work. In extending and deepening more competitive markets, we should use all tools available, including more investment-friendly fiscal and custom policies, in order to boost employment, R&D investments and the development of environmentally friendly technologies. In this respect, we warmly welcome the own-initiative report drawn up by Ms Wagenknecht, which aims at setting up the necessary fiscal framework to encourage risk and innovative investments in order to achieve the objectives of growth and employment. The advantages of simplifying and harmonising the taxation systems in the Union as a whole are obvious as not only it will help reaching the Lisbon objectives - through greater tax incentives for investments - but, furthermore, it will help achieve EU market integration by lifting remaining obstacles to the completion of the single market.
(The sitting was suspended at 09.55 a.m. and resumed at 10.10 a.m.)
