Standstill at the Financial Transaction Tax
In an open letter, 52 renowned international experts demand that the EU Finance Ministers conclude the negotiations on introducing the Financial Transaction Tax. This initiative harks back to an idea by Oxfam and the Tax against Poverty campaign. The negotiations have been dragging on for years – the initial Commission proposal on the Financial Transaction Tax dates from 2011. 10 EU countries are willing to implement the tax on financial transactions. For them, it could mean additional revenue of about € 22 billion – money, which could be used for combatting poverty or for investments in education and Infrastructure respectively. The reason given for the most recent delay was the new French government – the new Finance Minister Bruno le Maire would have to familiarise himself with the proposal first. At the meeting of the EU-Finance Ministers on July 10 there was again no decision for the introduction of the FTT. It seems that these plans are put on ice. The reason: Ex investment-banker now prime minister Macron wants to bring as many financial institutes from UK to France. The introduction of an FTT could harm these plans. There are worries that the FTT will not be introduced until the negotiations with the UK are finished.
Negotiations on reforming the Money Laundering Directive failed
The negotiations between European Parliament and Council on reforming the Money Laundering Directive failed at the end of June. The Green MEP Sven Giegold criticised that special interests of individual EU Member States were apparently more important than combatting money laundering. For example, there was no agreement in respect of the plan to provide a register for properties (land register) in all Member States. However, such a regulation was urgently needed to put a stop to money laundering in this sector. Apart from that, the Council had backed the idea that more general rules should apply to certain institutions (trusts) and so-called politically exposed persons, which might exacerbate the problems surrounding money laundering provisions.
Corporations must become more transparent
However, there is a partial victory for more tax fairness regarding the transparency of corporations. At the beginning of July, the European Parliament adopted a legal proposal, which obliges major companies with a turnover of more than 750 million euros to provide additional information. This concerns turnover, profits, taxes paid, the number of employees – all itemised for the individual countries, where the multinationals are active. This makes it easier to depict, in which countries companies are actually economically active and not just have a letterbox company for “tax optimisation” purposes. That way, it is also easier to apportion profits and corporate income tax to EU Member States. Unfortunately, the turnover threshold is very high; a reporting duty starting from a turnover of 40 million euros would have been welcome. However, there is still a long way until the law will be applied. First the Council of Finance Minister has to come to a decision and following that, negotiations between EU Parliament and Council are required to reach a unified position.
These three examples show that there are definitely discussions for more tax fairness. Unfortunately, it also becomes clear that in many cases the Council, consisting of Ministers of the 28 EU Member States, is the culprit that prevents speedy progress towards more transparency and fairness.