2010 November » Tax Research UK

Cross-political MEPs call for minimum common corporate tax rate of 25% as necessary for EU solidarity

Nov 252010

A cross-political alliance in the European Parliament has called for the introduction of a minimum European common corporate tax rate of 25%. MEPs from the Greens/EFA, ALDE, S&D and EPP groups issued the declaration in the context of the ongoing Eurozone solvency crisis and the rescue measures being proposed for Ireland.

Commenting on the declaration, Greens/EFA economic and finance spokesperson and co-signatory Sven Giegold said:

"Introducing a minimum common corporate tax rate in Europe is the only way to limit tax competition and the damaging effects this has had on the European economy and European solidarity. Today’s declaration is a welcome development, which represents the first time that such a broad political alliance in the European Parliament has thrown its weight behind a clearly defined common corporate tax rate.

"Tax competition within the EU and the Eurozone enables cross-border businesses to avoid over €100 billion in tax payments, notably by repatriating profits to jurisdictions with lower corporate tax rates. This not only undermines the spirit of the common market, it is grossly unfair and diminishes revenues in other member states. It is particularly odious that financial institutions, which have unfairly profited from this tax competition and thereby avoided their responsibilities to their national exchequers, should now be bailed out by the same public coffers.

"Ireland will clearly need support in the painful reconstruction of its economy following the crisis. However, it is not acceptable that this support should be used to rebuild an economy based on tax dumping."

Common declaration text:

Considering that the Irish banking system is in a serious solvency crisis and its stability is in the European public interest,

Considering that the Irish government has requested support from the EFSF/EFSM,

Considering that solidarity is a fundamental principle of the European Union, as set out in the Treaties, and support for Ireland is therefore consistent with European values,

Considering that the common market needs a stronger common European fiscal framework to ensure good regulation and fair competition, including general provisions for a common consolidated corporate tax base as well as minimum corporation tax rates,

Considering that European taxpayers and citizens had to take an important risk in order to stabilise a financial system which has been profiting from the exceptionally low Irish corporation tax rate of 12.5% if a loan is granted through the EFSF/EFSM,

We urge the European Commission to advance on the dossier of a Common Consolidated Corporate Tax Base,

We urge the European Commission, the Eurogroup and its members to ensure that the corporation tax rate will be increased to the average EU level of 25% in a spirit of solidarity.

Declaration signed by MEPs:

Jean-Paul Gauzes (EPP),

Udo Bullmann (S&D),

Sylvie Goulard (ALDE),

Sven Giegold (Greens/EFA),

Burkhard Balz (EPP),

Leonardo Dominici (S&D),

Wolf Klinz (ALDE)

and Pascal Canfin (Greens/EFA) – co-ordinators of their political groups on the EP economic and monetary affairs committee.

I predict a riot

Ireland Comments Off

Nov 242010

At the suggestion of a commentator here I offer the following:

I stress that I do not condone violence, and never will.

I do however condone civil protest and think it wholly legitimate and I do think it will happen.

And I am suggesting that when people are frightened and at the same time perceive gross injustice then they get angry. People in Ireland and the UK are frightened and gross injustice is planned in both countries.

I’m not alone in thinking this could lead to trouble.

In which case now is the time to change policy, and not the time to buy riot shields.

Why business commentators say Ireland’s austerity package won’t work

Ireland 8 Responses »

Nov 242010

Ireland’s austerity package is built on hope, but nothing else.

I’ve already noted that it will rile the whole of Europe because there’s no move on corporation tax. But it’s then fascinating to note that Business Insider says it won’t work either:

Then there’s the fact that all of the revenue hikes are to fall on the backs of consumers and retirees (there will be a hike in pension-related taxes) and not on corporations or banks, which may be inevitable, but it’s the kind of strategy that will flip out the public street and cause riots.

I didn’t say that.

Sober business journalists did.

But they’re right.

Just as they’re right to point out that believing Ireland will grow whilst suffering these cuts is plain daft and hoping that’s its cost of borrowing will fall to 4.4% is just plain crazy.

Sure the Ireland can pass this budget.

But they can’t deliver it.

I feel a report coming on…..

Tax management 4 Responses »

Nov 242010

The Treasury select committee has announced:

TREASURY COMMITTEE LAUNCHES INQUIRY INTO THE FUNDAMENTAL PRINCIPLES OF TAX POLICY

In the last month, the OECD in Paris and the IFS in London have each published important reports into the fundamentals of tax policy.

The OECD reports that the tax system should distort economic incentives as little as possible and that "corporate taxes are the most harmful type of tax for economic growth, followed by personal income taxes and then consumption taxes, with recurrent taxes on immovable property being the least harmful tax."

The Mirrlees Review, published by the IFS, argues that the tax system should be considered as a whole with the benefit system, seek neutrality, and achieve progressivity as efficiently as possible.

The Office of Tax Simplification has revealed that there are over 1,000 reliefs in the UK tax system.

The Treasury Committee has decided to launch its own inquiry into the principles which should underpin the tax system, and invites written evidence on the following points:

* What are the key principles which should underlie tax policy? * How can tax policy best support growth?
* To what extent should the tax system be structured to support other specific policy goals? * How much account should be taken of the ease and efficiency with which a particular tax can be imposed and collected? * Are there aspects of the current tax system which are particularly distorting?

I feel a report coming on. The deadline is 12 noon on Friday 14 January 2011. That looks like Christmas is cancelled‚Ä¶..

Nonsense from the Isle of Man

Europe, Isle of Man 9 Responses »

Nov 242010

The Isle of Man has commented on the EU Code of Conduct on Business Taxation, saying:

TREASURY Minister Anne Craine MHK says the Isle of Man Government will continue to monitor developments following Friday’s meeting of the EU Code of Conduct Group which is considering aspects of the Island’s zero-ten business taxation system: principally how the attribution regime for individuals (‚ÄòARI’) interacts with it.

The Minister commented:

‚ÄòThis is an important matter for the Isle of Man and we are gathering further information so that we can gain a clear and full understanding of any concerns raised on what are quite complex and technical issues. We would expect that the views of the EU Code of Conduct Group will be explained in detail so that we can consider them carefully before determining what course of action, if any, to take.’

The process was continuing, said Mrs Craine. She understood the next stage would be for the Group to report to the EU Council of Finance Ministers (‚ÄòECOFIN’), probably in December, on its work to date including consideration of aspects of the Isle of Man’s business taxation system.

This is blatantly misleading. Usefully Guernsey has said so.

The game is over. The Isle of Man knows it. And it’s pretending otherwise.

A little more honesty would become them – the people of the Isle of Man deserve it. No wonder so many of them come here to find out what’s really going on in the place in which they live. As one commentator has said:

As I’ve said before Richard, the IOM Government will finish the offshore industry by it’s own incompetence.

They should have been planning for this for years. When concerns were raised over the DPC version of 0/10 and it was amended to ARI, it was obvious to everyone that nothing had materially changed. They must have known this day would come.

My opinion is the Isle of Man is about to face the perfect storm‚Ä¶.0/10, EUSTD, VAT renegotiation. How this government deals with these issues is critical.

With the present lot of MHK’s and the FSC running the show, I am not hopeful for the future!

Deal over – Ireland doesn’t change its tax rate and so doesn’t deserve our money

Ireland, Tax Havens 14 Responses »

Nov 242010

As the FT notes:

Ireland will cut welfare expenditure, slash the minimum wage, raise income tax and introduce a levy on land and property owners under a drastic austerity plan intended to put the public finances on a stable long-term footing.

Under the four-year programme, announced on Wednesday, the government intends to save €15bn ($20bn) between 2011 and 2014 – or about 4 per cent of annual economic output – with €10bn in public spending cuts and €5bn in new taxes and revenues.

But corporation tax stays at 12.5%.

Game over with tolerance for this, I say.

People in the UK deserve to be livid about this. £7 billion of our money will bail out Ireland. Not a penny went to Sheffield Forgemasters.

I could live with the loan. I understand the need for the loan. But Ireland is sticking two fingers up at the people of the Ulk in return – let’s not beat about the bush. They’re still blatantly stealing our tax base.

Osborne says he does not care. Of course he doesn’t. He still has fixations about low, flat taxes. But the people of the UK are being taken for a ride here and enough is enough.

This loan requires legislation. I sincerely hope labour opposes it for this reason. And if not they should be ashamed of themselves. UK money should not be used to bail out tax havens who impose higher taxes and welfare cuts on the people of the UK. And it’s time to say so.

EU Commissioner demands automatic information exchange

EU STD, Europe, Secrecy jurisdictions, Tax avoidance 1 Response »

Nov 242010

Take a look at these remarks made last week by Algirdas ?†emeta, EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud, in a presentation entitled The Importance of Information Exchange in Tax Matters. (hat tip: Markus Meinzer and the Tax Justice Network).

I can only highlight a couple of things he said (and note that he was speaking in an official capacity, it seems.) Like Italian Finance Minister Giulio Tremonti, he gives short shrift to those who think a withholding tax regime alone is good enough. Proper information exchange, he says, is the thing to aim for.

"Automatic exchange of information permits tax authorities to obtain information on their own tax residents in cases where they might not otherwise be aware of such cross-border investments.
It is much more interesting for a tax authority to receive comprehensive information about the assets owned by its residents abroad than to receive only a withholding tax on the income produced by such assets. Such a withholding tax may generate some revenue, but it does not allow Member States to assess the overall tax base of their residents. As a consequence, the progressivity of some tax scheme cannot properly be applied. This leads to less revenue and the unequal treatment of taxpayers."

And as for the OECD’s forms of information exchange – they just aren’t good enough he says. So much for the OECD’s claim that theirs are the universally accepted international standard.

Undoubtedly, the OECD standards of transparency and exchange of information have paved the way for international consensus on the importance of effective exchange of information for collecting taxes. But as you may know, the OECD standards, which prevent States from invoking bank secrecy to refuse access to information, concerns exchange of information on request. This approach only works if the State that needs the information already has indications that a tax resident may have financial interests in another State.

Quite so. Well said. It’s the OECD’s Catch-22 approach. And then, back to the UK’s and Germany’s deeply flawed deals:

In this context, a distinction must be made between our closest neighbours and other international partners. Our European neighbours are closely associated to all our policies, through the EFTA and EEA agreements and, particularly in the case of Switzerland, also through a series of bilateral EU agreements. As a result, our respective markets are closely integrated and cross-border trade and investment are intense.
It is therefore only logical that we have higher expectations for these countries, and that we expect them to cooperate more closely with the EU on the exchange of information. In this context, it is not sufficient that individual EU Member States conclude bilateral agreements with third countries which provide for the OECD standards of transparency and exchange of information.

He is quite right. Fantastic to see influential people speaking truth to power.

Thanks to TJN for permission to use their post

Another note on comments

Blogging 12 Responses »

Nov 242010

I would remind commentators of the comments policy on this blog.

This makes clear that I do not tolerate the use of this blog for the regurgitation of neoliberal (or worse) thinking which has ample opportunity for expression elsewhere.

Nor do I tolerate anti-democratic commentary.

And repetition is not argument – it is boring. So it is deleted.

I also reserve the right to decide that a commentator is simply seeking to waste my time by commentating excessively with the sole apparent purpose of consuming my energy in dealing with their own predilections. Even if each comment would by itself be acceptable I will in such cases delete comments to save my own time, and that of the majority of readers. If someone who wants to comment here six times a day is that keen to blog please do it elsewhere – not here. You can always try to link – but I’d add I only show links when I think they have any merit – and I have yet to find a libertarian one with that quality.

And for all those who say this is censorship, I yet again repeat that editorial freedom is vital in a democracy. Which is why IO don’t enter into correspondence with those whose comments I have deleted. Just go and post them elsewhere. It’s really as simple as that.

With the greatest respect, Guernsey tells Jersey it’s got it wrong

Guernsey, Jersey 15 Responses »

Nov 242010

I published Jersey’s nonsensical press release on the EU Code of Conduct yesterday.

It seems only right I do the same for Guernsey. They say:

November, 23rd, 2010, The Policy Council confirms that it has received confirmation that, at its most recent meeting (19th November, 2010), the EU Code of Conduct on Business Taxation (‚ÄòCode Group’) agreed with unanimity that the zero/10 corporate tax regimes have harmful effects. It is understood that, whilst the formal assessment process has not technically been concluded, the expectation is that the Crown Dependencies will be required to introduce revised corporate tax regimes.

Although Guernsey’s zero/10 regime has not been subject to review by the Code of Conduct Group the implications of last Friday’s conclusion by the Code Group will need to be thoroughly reviewed and assessed.

Hang on a minute. Jersey said:

The Group considered a paper prepared by Commission officials that was concerned solely with whether the deemed distribution provision and the combined effect of taxation at company and shareholder levels came within the scope of the Code as business taxation.

and

With the exception of that provision, the 0/10 tax structure has not been formally addressed by the Commission or the Code Group. Therefore, with the exception of this anti-avoidance measure, nothing has been conveyed to the Island authorities that would indicate that the present 0/10 tax structure is in conflict with the Code criteria. This is fully in accord with the view expressed by the Island authorities to the Code Group and the Commission.

So Guernsey says for all practical purposes zero / ten is dead and jersey says there’s been a minor technical hiccup.

Who is telling the truth?

Guernsey, of course.

Philip Ozouf makes a fool of himself, again, as a result. You almost feel that Guernsey was saying so, but surely not?