October 24, 2023 Members of the European Parliament’s Committee on Economic and Monetary Affairs called for a systemic review of tax policy generally and corporate tax rules more specifically. By adopting two separate non-legislative resolutions, one on the role of tax policy in times of crisis and another on further reforms of corporate taxation rules, MEPs of the economic and monetary affairs committee argue that inequalities and the strain on European businesses, both exacerbated in these times of crisis, can be in part addressed by changes to the EU’s tax rules.
Role of tax policy in times of crisis
This resolution makes recommendations on how to better use tax policy as a tool to facilitate redistribution, raise revenue and steer behaviours, notably towards favouring environment friendly behaviours.
The resolution points out that some multinationals that made excess profits as a result of the times of crisis have often been undertaxed. It also highlights that environmental taxation remains low to total tax revenues in the EU, while fossil fuel subsidies remain high. Another area calling for attention is that of the problems posed to the international tax systems due to the rise of cross-border teleworking.
The resolution therefore calls for concrete policies, timelines and measures to phase out fossil fuel subsidies through tax measures as soon as possible, asking specifically that the taxation of air and sea transport be increased. It also highlights the need to focus on reducing tax fraud, avoidance and evasion in the area of direct and indirect taxation, calling on Member States to use the current legal and administrative tools more effectively.
Finally, the resolution invites the Commission to analyse a temporary excess profit tax on various sectors for future crises, to curb the oligopolistic power of certain companies and boost competitiveness.
The resolution was adopted with 30 votes in favour, 18 against and 4 abstentions.
The Draft text of the resolution as earlier published on the website of the European Parliament can be found here.
Further reform of corporate taxation rules
This resolution makes recommendations on how to use corporate tax rules to ease the burden on businesses, especially SMEs, in these difficult times of uncertainty and inflation.
Among other recommendations, it calls on Member States to enact temporary tax measures to mitigate the increase in energy cost and to use the additional revenues based on higher energy prices to provide direct and targeted relief to help the most vulnerable citizens and the middle class and to relieve the burden on citizens and companies, especially SMEs.
It also calls on the Commission to present an overall evaluation of previous actions taken on corporate taxation since 2011 and to publish a thorough impact assessment on the best options towards easing the administrative burden on businesses, particularly SMEs.
To reduce compliance costs and administrative burdens the resolution also calls on the Commission to conduct an impact assessment on the use of new technologies to improve the speed, efficiency, reliability, transparency and resilience of tax-related administrative procedures. It adds that this may lead the Commission to follow-up this exercise with a proposal to enhance cooperation between tax authorities, taking advantage of good practices identified, leading to a business-friendly environment.
The resolution was adopted with 46 votes in favour, 5 against and 2 abstentions.
The Draft text of the resolution as earlier published on the website of the European Parliament can be found here.
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