By Marta Andreasen
• It appears that the holidays have reinvigorated some to press on with the European Tax. Yesterday I attended a hearing on the subject under the title of “Innovative financing at global and European level”, where taxation Commissioner Algirdas Semeta [pictured] outlined his future proposals for EU taxation.
It is really quite worrying for the UK that such ideas are being seriously discussed by the Economic Affairs Committee. Semeta was addressing the Committee as it is preparing to vote on the Podimata report on “innovative financing at global and European level.” (As an accountant the term innovative applied to financing got my attention as it can mean shady practices.)
The Podimata report is one of those interesting “own initiative reports.” On its own it is not legislative but merely expresses the opinion of the rapporteur, the committee and the parliament and many times that is all that happens, a non-binding resolution is passed similar to a horn blowing in traffic. But that is not what is happening this time, here the rapporteur is writing a report asking the Commission to move further along the path of European taxation and the Commission wants to hear this from the Parliament in order to justify its proposals. So some time after the report is voted by the Parliament we can expect concrete proposals for new taxation to follow from the Commission.
The taxations that are being discussed are nominally in response to the financial crisis, but really they are not letting a good crisis go to waste on the path to the EU superstate. There are three different items under discussion: financial taxes, a carbon tax and Eurobonds.
Two types of financial taxes are being discussed: a financial activities tax and a financial transaction tax. The Commission prefers the financial activity tax which intends to tax bonuses, salaries and profits and would yield €25 billion without affecting -according to them-European competitiveness. The Parliament would prefer the financial transaction tax which would tax all transactions at 0.01% to 0.05%. This is thought to raise from €60 billion to even 10 times that amount if derivatives are included! The danger the Commission sees in this tax is that it would push transactions away from Europe to other parts of the world that do not have such a tax, after all, today transactions are electronic entries in computers that can reside anywhere. But they are not going to let that deter them and are talking to other countries around the world to see if a global financial tax can be arranged. The Commissioner says that the American authorities are interested and would like to see the impact of the Commission’s studies.
The carbon tax has been here before and despite being sent away is back again maybe with a better chance of being enacted this time. The proposals for the carbon tax are also far reaching. They would like to expand the carbon tax to all areas not covered by the Emissions Trading Scheme and to revise the energy taxation directive to include CO2 as a basis for taxation. They would then impose this tax on all products just like VAT, in other words an increase in VAT to take carbon into account. I wish I was making this up but I am afraid it is true that this is what they want to do and I expect they will carry it off.
The last revenue stream (not exactly a tax in this case) being discussed is that of Eurobonds. This does not come under the portfolio of the Taxation Commissioner but rather the Economic and monetary Affairs Commissioner, our friend Olli Rehn, so it did not get the same airing as the two taxes. The Podimata report promotes the pooling of sovereign debt, Eurobonds. It asks that an agency be created to issue them and calls for an impact assessment on the feasibility of creating these Eurobonds to finance European infrastructure.
We are back to where we were during the 2011 budget negotiations: the Parliament wants to control “a substantial part of those revenues” as part of the EU budget to finance EU projects and policies. Even though the last time “own resources” was pushed by the Parliament, the Council stonewalled it and gave up nothing, I am wondering if in exchange for a portion of those new revenues, the governments will allow Brussels some more control… Time will tell.