EU to bring forward proposals to end unanimity on tax for May summit

Kermit.de.frog · 28-10-2018 9:15pm #1

https://www.thetimes.co.uk/edition/business/britain-faces-brexit-trap-as-eu-moves-to-grab-tax-powers-k55hhxc50

The European Commission is pressing ahead with a controversial shake-up of voting rules because many of its flagship tax policies have stalled, due to opposition from certain member states. Ireland has objected to plans for a “digital services tax” on American tech giants, as well as Brussels’ proposal to harmonise rates of corporation tax across the EU.

The commission said last week that it would bring forward plans to move to a system of “qualified majority voting” for tax at an EU summit in May. Currently, tax changes require unanimity among all 28 member states, in effect…

Sorry, can't post full article.

Potentially massive consequences for Ireland.

I'll be honest this is what concerns me about the solidarity over the border.

So what are we going to do with our vital economic interest under threat?

micosoft · 28-10-2018 9:25pm

We could veto it.

That said, it's probably best we start recognising we had a good run on tax and we need to agree a pace to harmonise tax across the EU. Over ten-fifteen years Ireland can wean itself off that (it's already happening).

We should then negotiate the best deal we can. In return we should get a guarantee that the EU provide structural funds to support Brexit transition and agree to support funding any future unification.

jm08 · 28-10-2018 10:30pm

This is the proposed temporary ''Digital Services Tax'' of 3%. A few countries like Ireland (including Germany) think they should wait until the Global system is devised. Also, it is very likely to really annoy Trump if the EU does it now. Austria and France are the two that are pushing this.

Infini · 29-10-2018 3:24pm

As much as they might want to otherwise any attempt to remove tax from the control of member states will likely get Veto Nuked to oblivion unless there's a serious move to replace the lost revenue with something of equal value.

Peregrinus · 30-10-2018 2:20am

It would require a new treaty, which in Ireland (and several other member states) would require to be approved in a referendum. It's really not a flyer. My guess would be that the Commission is bidding high with a view to settling for something much more modest.

Kermit.de.frog · 01-11-2018 11:17am

https://www.irishtimes.com/business/economy/pressure-mounts-on-ireland-to-accept-eu-digital-tax-1.3681963?mode=amp

This is just the tip of the iceberg.

There is a concerted and co-ordinated campaign now by the EU commission and member states to take complete control of corporate taxes next year.

This is against Ireland's economic interest and I struggle to see how we will hold out.

oscarBravo · 01-11-2018 1:17pm

Kermit.de.frog wrote: »

There is a concerted and co-ordinated campaign now by the EU commission and member states to take complete control of corporate taxes next year.

Repeat after me: direct taxation is not an EU competence.

Again: direct taxation is not an EU competence.

I can't hear you down the back: direct taxation is not an EU competence.

...I struggle to see how we will hold out.

By not agreeing to the required treaty change?

ancapailldorcha · 01-11-2018 1:19pm

Kermit.de.frog wrote: »

https://www.irishtimes.com/business/economy/pressure-mounts-on-ireland-to-accept-eu-digital-tax-1.3681963?mode=amp

This is just the tip of the iceberg.

There is a concerted and co-ordinated campaign now by the EU commission and member states to take complete control of corporate taxes next year.

This is against Ireland's economic interest and I struggle to see how we will hold out.

No it isn't. It's tiresome scaremongering and no Taoiseach will be stupid enough to agree to a referendum on a treaty change.

Peregrinus · 01-11-2018 2:23pm

ancapailldorcha wrote: »

No it isn't. It's tiresome scaremongering and no Taoiseach will be stupid enough to agree to a referendum on a treaty change.

. . . and if he is stupid enough to agree to a referendum on a treaty on this point, the people will not be stupid enough to approve the treaty. We're not British, after all.

Eric Cartman · 01-11-2018 3:49pm

Or how about the EU keep out of it and we just veto everything.

Tax harmonisation with the EU or allowing the EU to impact our taxation rates would only be a loss for Ireland, nothing to gain

Peregrinus · 02-11-2018 2:45am

Actually we could have quite a bit to gain from some measure of agreed tax harmonisation. There's a growing international intolerance for corporate tax havens, and a call for collective measures to limit them. Ireland absolutely does not want to find itself on the outside of that particular coalition, and the target of sanctions or punitive measures; we're much better off being part of that movement, and in a position to shape it, inc. by influencing the positions the EU adopts in this conversation. In terms of serving Ireland's interests there are definite trade-offs here, and we are better positioned if we recognise that, make some choices and act accordingly that if we just adopt an absolutist "no surrender!" policy.

In other words, while it may not be in our interests to agree to any transfer of tax competence to the Union, it may be in our interests to exercise our own tax competence in a collective and collaborative way to participate in framing and implementing internatiuonal measures to control the impact of corporate tax havens.

"Everything must continue exactly as it is now forever" is not going to be a beneficial strategy here. The question for Ireland is whether we participate in shaping the changes, or whether we just sulk on the sidelines and let whatever is going to happen to us happen to us.

[Deleted User] · 05-11-2018 8:26am

oscarBravo wrote: »

Repeat after me: direct taxation is not an EU competence.

Again: direct taxation is not an EU competence.

I can't hear you down the back: direct taxation is not an EU competence.

By not agreeing to the required treaty change?

Isn’t that one of the roles of the Comission though, to make proposals on what should be EU competences?

If 24 countries want the change and three don’t, where does that leave the three, in the second tier of the two speed Europe?

Peregrinus · 05-11-2018 9:19am

Aegir wrote: »

Isn’t that one of the roles of the Comission though, to make proposals on what should be EU competences?

If 24 countries want the change and three don’t, where does that leave the three, in the second tier of the two speed Europe?

Not necessarily. A transfer of tax (or any other) competence to the Union requires a treaty change, and that has to be unanimous. Even if the treaty only provides for some countries to transfer a competence to the Union, the treaty still requires unanimous ratification by all countries. So, yes, Ireland could, in theory, veto a treaty under which Ireland transferred no competence to the Union but other countries did.

In practice, of course, Ireland would burn a lot of goodwill by doing that, and we might conclude that the more advantageous strategy was not to veto the treaty but to seek to influence it in a way that served our interests.

And we wouldn't be alone; we're by no means the only EU member state that uses tax to target or deliver policy outcomes, so there'd be plenty of common cause to be formed with other member states whose concerns about this might have much in common with ours.

[Deleted User] · 05-11-2018 9:57am

Peregrinus wrote: »

Not necessarily. A transfer of tax (or any other) competence to the Union requires a treaty change, and that has to be unanimous. Even if the treaty only provides for some countries to transfer a competence to the Union, the treaty still requires unanimous ratification by all countries. So, yes, Ireland could, in theory, veto a treaty under which Ireland transferred no competence to the Union but other countries did.

In practice, of course, Ireland would burn a lot of goodwill by doing that, and we might conclude that the more advantageous strategy was not to veto the treaty but to seek to influence it in a way that served our interests.

And we wouldn't be alone; we're by no means the only EU member state that uses tax to target or deliver policy outcomes, so there'd be plenty of common cause to be formed with other member states whose concerns about this might have much in common with ours.

I think we are kind of saying the same thing here.

Proposing medium term strategies that are in the Unions best interests are very much part of their remit, so drafting up proposed legislation on a unified corporation tax regime is certainly within their powers. The important issue is whether or not the member states agree to the treaty change.

If the EU is serious about preventing these tax avoidance schemes (remembering of course that the current Commission president was responsible for setting up Luxembourg's tax laws), then it is hard to see any treaty change that is in the favour of Ireland, so a veto is the likeliest outcome.

This then begs the question, do those that oppose this then fall in to the proposed second tier of the EU for countries that are moving towards ever closer union at a slower pace and if so, does that mean the common market is also split, so that when companies like Microsoft sell in to the German or French markets, they also pay the full amount of corporation tax there, rather than their Dutch/Irish sandwich scheme?

The main protagonists (Malta, Ireland, Luxembourg and the Netherlands) really need to sort this out themselves, because it appears to be a thorny issue in the EU and one that could end up with quite significant ramifications.

Peregrinus · 05-11-2018 10:21am

Aegir wrote: »

I think we are kind of saying the same thing here.

Proposing medium term strategies that are in the Unions best interests are very much part of their remit, so drafting up proposed legislation on a unified corporation tax regime is certainly within their powers. The important issue is whether or not the member states agree to the treaty change.

Nonono. It's definitely not part of the Commission's remit to draft proposed legislation which the Union has no competence to enact. They have to tackle the issue head on, and draft a proposal to amend the Treaties. (Or, at this stage, make a case for the Council to approve the drafting of a proposed amending Treaty.) They are several steps away from the point where they would have any remit to be drafting proposed EU tax legislation.

Aegir wrote: »

If the EU is serious about preventing these tax avoidance schemes (remembering of course that the current Commission president was responsible for setting up Luxembourg's tax laws), then it is hard to see any treaty change that is in the favour of Ireland, so a veto is the likeliest outcome.

I don't think it is. A veto only arises if every other state wants to make the change, and I think we're a long way off that. Our strategy would not be to veto, but to make alliance with other member states to shape the draft amending treaty into something that we wouldn't have to veto, and I think there's plenty of scope for that.

Aegir wrote: »

This then begs the question, do those that oppose this then fall in to the proposed second tier of the EU for countries that are moving towards ever closer union at a slower pace and if so, does that mean the common market is also split, so that when companies like Microsoft sell in to the German or French markets, they also pay the full amount of corporation tax there, rather than their Dutch/Irish sandwich scheme?

The main protagonists (Malta, Ireland, Luxembourg and the Netherlands) really need to sort this out themselves, because it appears to be a thorny issue in the EU and one that could end up with quite significant ramifications.

You're way ahead of yourself here. If you think "a veto is the likeliest outcome", then you don't think there's going to be a two-speed Europe on this point, since the hypothetical treaty which would create the inner core of tax-harmonised states will never come into force. It would be vetoed.

The question we need to think about is, what would we want to see in a treaty that we could live with, and not only not veto but actually participate in?

4068ac1elhodqr · 05-11-2018 2:34pm

Corporation tax harmonisation plans across the euro zone 'pose a bigger threat to Ireland than Brexit', the head of the Irish Fiscal Advisory Council has strongly warned.

Some of the fiscal suits in the EC have also hinted at using 'extraordinary powers' to bypass any veto of tax harmonisation in the future.

The key to economic survival and success with this (and anything really) is preperation, preperation and preperation.

Podge_irl · 05-11-2018 7:35pm

Omari Mushy Transistor wrote: »

Some of the fiscal suits in the EC have also hinted at using 'extraordinary powers' to bypass any veto of tax harmonisation in the future.

What extraordinary powers? There is no power, extraordinary or otherwise, to make something an EU competency that is not currently one without every member state agreement.

4068ac1elhodqr · 05-11-2018 7:53pm

Podge_irl wrote: »

What extraordinary powers? There is no power, extraordinary or otherwise, to make something an EU competency that is not currently one without every member state agreement.

Powers that are 'extra-ordinary', and/or not (currently) in existance.

"The EU’s tax commissioner Pierre Moscovici said in November 2017, that the Commission was considering using extraordinary powers to strip EU states of their veto power on tax matters to break resistance over blocked legislation."

Eric Cartman · 05-11-2018 9:23pm

Omari Mushy Transistor wrote: »

Corporation tax harmonisation plans across the euro zone 'pose a bigger threat to Ireland than Brexit', the head of the Irish Fiscal Advisory Council has strongly warned.

Some of the fiscal suits in the EC have also hinted at using 'extraordinary powers' to bypass any veto of tax harmonisation in the future.

The key to economic survival and success with this (and anything really) is preperation, preperation and preperation.

Us having the same tax rate as the rest of the EU would be a complete nightmare.

Irelands advantage lies in being the best little place to not pay tax.

oscarBravo · 05-11-2018 9:50pm

Eric Cartman wrote: »

Us having the same tax rate as the rest of the EU would be a complete nightmare.

Tax harmonisation has nothing whatsoever to do with tax rates.

Eric Cartman · 05-11-2018 11:05pm

oscarBravo wrote: »

Tax harmonisation has nothing whatsoever to do with tax rates.

no, but unless everyone harmonises on 0 then it really hurts Irelands advantages that attract a hell of a lot of FDI here.

Podge_irl · 06-11-2018 9:44am

Omari Mushy Transistor wrote: »

Powers that are 'extra-ordinary', and/or not (currently) in existance.

"The EU’s tax commissioner Pierre Moscovici said in November 2017, that the Commission was considering using extraordinary powers to strip EU states of their veto power on tax matters to break resistance over blocked legislation."

The EU can not simply give itself powers it does not currently possess.

Podge_irl · 06-11-2018 9:47am

Eric Cartman wrote: »

no, but unless everyone harmonises on 0 then it really hurts Irelands advantages that attract a hell of a lot of FDI here.

You are agreeing that tax harmonisation is nothing to do with tax rates and then immediately talking about tax rates

Zubeneschamali · 06-11-2018 10:15am

Omari Mushy Transistor wrote: »

"The EU’s tax commissioner Pierre Moscovici said in November 2017 that the Commission was considering using extraordinary powers to strip EU states of their veto power on tax matters to break resistance over blocked legislation."

I am considering using extraordinary powers to flap my arms and fly to the Moon.

OK, I have considered it and discovered that, like the Commission, I do not have any extraordinary powers.

oscarBravo · 06-11-2018 1:03pm

Omari Mushy Transistor wrote: »

"The EU’s tax commissioner Pierre Moscovici said in November 2017, that the Commission was considering using extraordinary powers to strip EU states of their veto power on tax matters to break resistance over blocked legislation."

Ireland’s corporate tax rate is amongst the lowest in Europe, and it can only be changed by the Irish Government. In fact, European Commissioner for Economic & Financial Affairs, Taxation & Customs, Pierre Moscovici has confirmed the European Commission fully respects Ireland's tax sovereignty and stated that the EU poses no threat to Ireland's corporate tax rate.

https://ec.europa.eu/ireland/news/key-eu-policy-areas/taxation_en

Zubeneschamali · 06-11-2018 1:54pm

oscarBravo wrote: »

https://ec.europa.eu/ireland/news/key-eu-policy-areas/taxation_en

To quote at a bit more length, these remarks were 24/01/2017 by Moscovici himself:

On the issue of corporate taxation, I want to say four main things.

First, the European Commission fully respects Ireland's tax sovereignty. This sovereignty is protected by the Treaties and reinforced by the unanimity rule. All voices are equal in EU tax policy and no Member State can be overruled. In particular, the EU poses no threat to Ireland's corporate tax rate. The only way that the 12.5% can be changed is by the Irish government itself.

Second, our proposal for a redesigned Common Consolidated Corporate Tax Base has a lot to offer to Ireland, if one is willing take a fresh look at it. The CCCTB can make Ireland even more attractive to foreign investors: in addition to Ireland’s 12.5% rate – which will not be changed by this proposal – it would have a modern, simple and stable corporate tax system, which applies across the entire EU. This is a combination which, coupled with the other factors underpinning the Irish success story, would in my view boost and not undermine Ireland’s attractiveness as an investment location.

Third, the CCCTB is not a "diktat from Brussels". It is a proposal, which all Member States must now negotiate. Ireland must bring its best ideas to the table, and fight its corner when it needs to. Every Member State should be a winner with the CCCTB. We will defend our proposal, but we will not stand in the way of any good compromise.

And fourth, the EU needs a strong Ireland and Ireland needs a strong EU. Ireland's success, Ireland's growth and Ireland's competitiveness are good for our Union as a whole. And a stronger, fairer and more competitive EU makes Ireland stronger too. We are good for each other – and we will be even more important to each other in the uncertain years ahead.

4068ac1elhodqr · 06-11-2018 2:52pm

The digital sales tax currently under consideration, is only the start of a slippery slow slope to full harmonisation.
Anyone who doubts this, likely has their head in the sand. Sure not today, tommorow but at some stage in the future, it's on the cards.

Sure they can't (currently) force it, but they can debate it, from the corridors at Davos or Brussels.
More importantly, they can certainly 'bargain it'.

All it may take is another severe debt crisis, afterall Greece didn't ask for 8yrs of economic woe, but they had no other practical choice but to bend over and take very hard austerity.

Within the EU, Ireland is a fairly minor economy and power, the big players would likely prefer to get their fair share of the huge US corporate's tax take, even in sacrifice for upsetting a few folks in Europe's 14th economy.

The real question is, without a tax advantage, and well educated but small workforce, what else can an Island off another non-eu island offer?
Outside of the re-packaged medicaments and the agri-food sector, is anything really innovative designed, registered, manufactured and exportred?

What will 'Industry 4.0' look like for Ireland in the next decade(s), will it be simply be 'something that rolls off an import container' at Dublin Port?

oscarBravo · 06-11-2018 8:16pm

Omari Mushy Transistor wrote: »

The digital sales tax currently under consideration, is only the start of a slippery slow slope to full harmonisation.
Anyone who doubts this, likely has their head in the sand. Sure not today, tommorow but at some stage in the future, it's on the cards.

Here's the thing: there's an interesting discussion to be had on this topic, but, being completely frank, I'm not sure that there's an interesting discussion to be had on it with you.

The reason I say that is that you are either unwilling or unable to have a conversation on the facts. You keep quoting one remark from Moscovici, but never engage whenever anyone points out all the things he has said that contradicts you. You keep talking about tax harmonisation, but give no sign of understanding what that actually means, no matter how many times it's explained to you.

You seem to want to drive the conversation from an angle of how the nasty EU is going to do nasty things to us, which is, bluntly, an argument rooted in either ignorance or malice.

I've never been able to figure out which of those it is, because you never actually engage on the subject; you just keep repeating the same old tired talking points however often they're debunked.

So, what's it to be? Are you interested in an actual discussion on the topic? If so, can we start with you acknowledging that tax harmonisation has absolutely nothing whatsoever to do with tax rates?

4068ac1elhodqr · 06-11-2018 8:52pm

oscarBravo wrote: »

tax harmonisation has absolutely nothing whatsoever to do with tax rates?

Specifically it's only regarding 'corporate tax rate' harmonisation, not any other taxes, not income tax, not VAT or any other tax. 12.5% is the sweetner that the large corporates crave (not to mention other more tasty sweetener deals).

So your 'only single tired and repetative point' is that this can 'never, never, never' be influenced, considered, discussed or bargined with, in future years (likely as a form of leverage) by a growing, more integrated and powerful Europe, ever.

Fair enough. There is no harm in hoping for the best, but what about realism of planning for the unexpected, in years to come.

Even if Ire's corp rate can't be moved by Europe, what if the Europes bigger players decide to lower or even match their rates, in order to attract their own multinational inward investment, will that have no influence on jobs here?

oscarBravo · 06-11-2018 9:02pm

Omari Mushy Transistor wrote: »

Specifically it's only regarding 'corporate tax rate' harmonisation...

OK. It's a complete waste of time trying to have a conversation with someone who's immune to basic facts. It's still not clear whether you don't understand what you're talking about or are being deeply disingenuous for some reasons of your own.

Podge_irl · 06-11-2018 9:23pm

Omari Mushy Transistor wrote: »

Specifically it's only regarding 'corporate tax rate' harmonisation

No it isn't. This is a fundamental, verifiable fact that you are continuing to get wrong.

Omari Mushy Transistor wrote: »

Even if Ire's corp rate can't be moved by Europe

There is no "if". It can't

Omari Mushy Transistor wrote: »

what if the Europes bigger players decide to lower or even match their rates, in order to attract their own multinational inward investment, will that have no influence on jobs here?

What if they do? There is nothing stopping them doing so now, EU or otherwise. So what on earth is your point?

EU to bring forward proposals to end unanimity on tax for May summit

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