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European Union,
Article: Point of View: Fair Play at Corporate Taxes - Now
By
Valdis Dombrowskis
, Vice President of European Union
Commission,
and by
Pierre Moscovici
, European Union Commissioner for Economic
and Financial Affairs,
from Frankfurter Allgemeine Zeitung, Frankfurt, Germany, June 17, 2015
Some companies in Europe are playing a game, which runs counter to all principles of fair
play. Let us call it “Taxes do not annoy me!.” The objective is simple: It is all about paying as
few taxes as possible. Some companies are playing it more skilfully and without scruples than
others. But today we are changing the rules of the game. It is now about jobs, growth and
investments. We want Fair Play and equal starting conditions for all corporations.
Tax avoidance is costing the European Union Member States billions of public money. They
are competing for profits of corporations without shaping their tax policy in a growth-friendly
way. For all of those, who are paying their taxes, this has devastating consequences. Smaller
companies which are not operating beyond borders, are paying a high price for the misusing
tax practices of some of their greater competitors. Corporations which are not exercising tax
avoidance are disadvantaged versus the other ones. In short: the tax system of today is
attractive for corporations which want to avoid taxes. Many others who are actively investing
in the European Union and creating jobs are burdened with this.
Our citizens – the tax burden of whom has increased as a consequence of the crisis –
understandably do not any longer accept that some of the richest corporations in the world pay
little or no taxes at all. This lack of tax justice is not only endangering the social contract
between state and citizen, but also our European economic model. The European Union
undertakes great efforts in order to enhance jobs, growth and investments. The taxing of
corporations should contribute to this. This, however, is not always the case.
The problem can only be solved with a basic comprehensive reform of the taxation of
corporations. Our tax law dates back to the 1930’s and must be urgently modernized. Legal
gaps and legal ways of tax avoidance must be eliminated. The states must understand that
going their own way with tax politics and with an unlimited tax competition does cause more
damage than benefit. If we want to eliminate tax avoidance and we want to create a tax
system which is allowing growth and investment, then we need a new taxing scheme for
corporations in Europe which also applies uniformly: The concept which makes possible a
just and effective taxation and which supports all corporations in the internal market.
Multinational groups should not pay more and less than domestic corporations.
IAFEI Quarterly | Issue 29 | 8