Commission President Juncker gets tough concerning EU tax policy

Juncker’s State of the Union Address – a chance for fairer tax policy

The platform ‘No to Tax Havens’ has already reported about the difficulty to achieve more decisions regarding tax justice in respect of important tax issues at EU level on several occasions. The reason being that most tax policy decisions are the preserve of the (Financial Ministers-) Council. As a result, the European Parliament has no voice in these matters. Apart from that, all decisions on tax policy must be taken unanimously. This is in contrast to most other policy areas, where a qualified majority is sufficient.

Commission President requests majority decisions instead of unanimity in tax policy

However, a new demand of the EU-Commission President Jean-Claude Juncker in his State of the Union Address is now causing a stir: a qualified majority in the Council shall now be sufficient to take a decision in respect of tax issues such as the Financial Transaction Tax, fair taxation regarding the digital economy or the Common Consolidated Corporate Tax Base. In doing so, Juncker addresses one of the most important problems, which prevent the path to more tax justice. Because of the unanimity requirement, important decisions on fair profit taxation of companies or a tax on financial transactions have time and again been blocked by a small number of Member States. In most cases these are countries that have to be called tax havens themselves.

How realistic is Juncker’s proposal?

In spite of Commission President Juncker’s good intention, it is unlikely that altering the voting rules concerning tax policy will materialise in the near future. However, according to Juncker it would not be necessary to alter the EU Treaty. There were bridge clauses in the treaties, which would make adjusting the voting rules possible. Nevertheless, all Member States have to agree to this alteration. However, it is to be feared that exactly the tax haven countries will oppose this reform.
Having said that, the symbolic power of the Commission President’s statement carries weight: according to the will of the European Commission, a stop shall be put to tax tricks adopted by large corporations and wealthy individuals as well as to tax havens within the EU. Hence, the pressure on low tax countries is increasing further.