P6_TA(2007)0470#Taxation and customs policies and the Lisbon Strategy#European Parliament resolution of 24 October 2007 on the contribution of taxation and customs policies to the Lisbon Strategy (2007/2097(INI))
Date: 2007-10-24
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: basis of tax assessment, common tariff policy, corporation tax, free movement of capital, research and development, tax harmonisation

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Wednesday 24 October 2007

Calls on the Commission to immediately start preparing an EU-wide eco-driving campaign as part of

59.
the strategy to reduce CO2 from cars;

Calls on the Commission to report to the European Parliament on how the CO2 benefits from eco-
60.
driving can be made monitorable and, if the Commission believes that this is not the case, explain why
the Commission is financing the ECODRIVEN project that aims at quantified CO2 reductions through
eco-driving;

Supports the principle that undergoing a course in eco-driving should become a mandatory require-

61.
ment for possession of a driving licence;

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Instructs its President to forward this resolution to the Council and the Commission, and the govern-

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ments and parliaments of the Member States.

P6_TA(2007)0470

Taxation and customs policies and the Lisbon Strategy

European Parliament resolution of 24 October 2007 on the contribution of taxation and customs
policies to the Lisbon Strategy (2007/2097(INI))

The European Parliament,

— having regard to the Communication from the Commission to the Council and the European Parlia-
ment on The contribution of taxation and Customs policies to the Lisbon Strategy (COM(2005)0532),

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee on Coordinating Member States' direct tax systems
in the Internal Market (COM(2006)0823),

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee on Exit taxation and the need for coordination of
Member States' tax policies (COM(2006)0825),

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee entitled, Towards a more effective use of tax incen-
tives in favour of R&D (COM(2006)0728),

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee on Implementing the Community Lisbon Pro-
gramme: Progress to date and next steps towards a Common Consolidated Corporate Tax Base
(CCCTB) (COM(2006)0157),

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee on Tax treatment of Losses in Cross-Border Situa-
tions (COM(2006)0824),

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Wednesday 24 October 2007

— having regard to its position of 10 March 2004 on the proposal for a Council directive amending
Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divi-
sions, transfers of assets and exchanges of shares concerning companies of different Member States (1),

— having regard to its resolution of 13 December 2005 on taxation of undertakings in the European

Union: a common consolidated corporate tax base (2),

— having regard to its resolution of 29 March 2007 on the future of

the European Union's own

resources (3),

— having regard to the informal Ecofin Council meetings on 10 and 11 September 2004 and on 7 and

8 April 2006,

— having regard to the Communication from the Commission to the Council, the European Parliament
and the European Economic and Social Committee on Tackling the corporation tax obstacles of small
and medium-sized enterprises in the Internal Market — outline of a possible Home State Taxation pilot
scheme (COM(2005)0702),

— having regard to the Commission's European Tax Survey (SEC(2004)1128,

— having regard to the Presidency conclusions following the Lisbon European Council of 23 and
24 March 2000, the Stockholm European Council of 23 and 24 March 2001, the Barcelona European
Council of 15 and 16 March 2002 and the Brussels European Councils of 22 and 23 March 2005, 15
and 16 December 2005 and 23 and 24 March 2006,

— having regard to the OECD report on harmful tax competition: An Emerging Global Issue, 1998,

— having regard to the Commission report on Structures of the taxation systems in the European Union,

2006,

— having regard to Rule 45 of its Rules of Procedure,

— having regard to the report of the Committee on Economic and Monetary Affairs (A6-0391/2007),

A. whereas the national tax systems need increasingly to take into account the globalisation of the econ-

omy and the need to accumulate human capital in a knowledge-based society,

B. whereas the existence of 27 different tax systems in the European Union constitutes an impediment to
the smooth functioning of the internal market, causes significant additional costs for cross-border
trade and business in terms of administration and compliance, hinders corporate restructuring, renders
EU undertakings less competitive at a global level, and leads to cases of double-taxation,

C. whereas Parliament's resolution of 29 March 2007 on the future of

the European Union's own
resources stresses that any future system of own resources in the European Union must respect the
principles of Member States' fiscal sovereignty as well as fiscal neutrality, and also mentions, as a
possible long-term option for the future of the European Union's own resources, the imposition of a
Community tax or new national taxes which would directly benefit the European Union,

D. whereas tax competition in the European Union has led — and continues to lead — to EU-
wide economic gains by way of a dynamic corporate environment, but that appropriate EU-level tax
coordination, which does not attempt to harmonise tax rates, can contribute to the benefits of tax
competition being even more widely shared between undertakings, their employees and consumers,

(1) OJ C 102 E of 28.4.2004, p. 569.
(2) OJ C 286 E, 23.11.2006, p. 229.
(3) Texts Adopted, P6_TA(2007)0098.

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E. whereas there are certain countries within the European Union in which tax revenue from capital has
increased due to greater general economic growth and, in particular, on account of the launching of
many new companies and their significant profit growth,
in contrast to those countries in which
revenue capacity has decreased following slower growth,

Wednesday 24 October 2007

F. whereas overall taxation levels in the different Member States vary between 28,4 and 50,5 % of GDP,

the corollary of which is that there are different levels of impact as regards the economy,

G. whereas given the impact of R&D on growth and jobs, it is necessary to examine a more effective use

of tax incentives for R&D,

H. whereas achieving the objectives of the Lisbon Strategy necessitates increased coordination of Member
States' fiscal policy; whereas Europe must build a distinctive economic and social framework, which
transforms a competitive advantage due to a diversity of cultural heritage and intellectual capital into
innovation-driven productivity growth,

I. whereas elements in the current fragmentation of tax systems constitute loopholes enabling tax evasion;
whereas the tax revenue lost by fraud and tax evasion is estimated to amount to between EUR 200 and
EUR 250 billion as regards VAT alone,

J. whereas the accurate measure of a tax burden is the effective tax rate, which comprises the nominal tax

rate and a tax base,

K. whereas energy taxation is a useful tool in that it both applies the ‘polluter pays’ principle and achieves
a reduction of pollution at source; whereas there is an urgent need to address the ever growing envir-
onmental impact of traffic in order to address climate change,

L. whereas energy taxation and the EU Emissions Trading System are two significant economic instru-

ments in use which address energy consumption and CO2 emissions,

The contribution of taxation policy to the Lisbon Strategy

1.
Recalls that decisions linked to fiscal policy, such as the provision of fiscal incentives to undertakings,
are the main instrument for developing and increasing the number of jobs, but also for increasing R&D
investment and environmentally friendly technologies; stresses, however, that if fiscal policy is to make a
substantive contribution to the Lisbon Strategy, the constant monitoring of the manner of redistributing
additional revenue generated by such tax relief for undertakings is needed, with a view to ensuring that the
additional revenue is in fact used to boost innovation and more energy-efficient technology;

2.
Notes the trend in declining corporate tax rates in the European Union as well as in other OECD
countries, which reflects increasing global competition, structural change and development in financial mar-
kets, notes however that the overall level of taxation in Europe remains higher in comparison to that of
other OECD countries; also draws attention to the fact that public revenue as a whole has increased despite
declining effective rates of corporate tax; notes the need for a coordinated fiscal framework,
including
corporate tax arrangements, which should be favourable to companies, in particular SMEs, and geared to
renewing growth and generating employment;

3.
Regards it as necessary to set up a public finance policy environment that is favourable to growth and
employment in the economy, and to promote healthy tax competition in the European Union so that the
tax burden is widely shared by employees and consumers, businesses and those deriving income from
capital; points out that the European Union must promote tax arrangements to encourage the creation of
new businesses and technological innovation;

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Underlines that, in general, tax systems in the Member States have gone too far in applying relatively

4.
high rates to low tax brackets, which discourages risk-taking and the establishment of start-ups;

Considers that it is possible to have competitive tax arrangements without undermining state funding,
5.
as seen in those European countries that have in the last decade succeeded in increasing their tax revenue
through tax cuts accompanied by a widening of tax bases, while controlling expenditure, thereby reducing
their deficits;

6. Welcomes the Commission's intention to develop solutions for problems arising from transfer pricing
rules in the European Union;

7. Welcomes the Commission's proposed pilot project to apply the principle of home state taxation to
corporate tax paid by SMEs;

8.
Recognises the difficulties facing SMEs in the European Union and other OECD countries in financing
their projects and endorses the provision of fiscal incentives to encourage SMEs to take more advantage of
intermediary financing mechanisms, such as, inter alia, entrepreneurial share capital and business angel net-
works;

Draws attention to the shortfall in public revenue caused in the European Union by tax fraud and

9.
urges the Commission and the Member States to take further action to combat tax fraud;

10.
Takes the view that in order effectively to combat tax evasion and tax fraud, a radical change is
needed in the way that fiscal services operate based on modern organisational and sound administration
principles and stresses that the Commission should take significant initiatives to support coordination at
Community level in this sector;

Considers that VAT relief

11.
for community-oriented public or semi-public undertakings must be
retained; believes that a one-stop-shop for companies to deal with their EU-wide VAT obligation must be
introduced;

Calls on the Member States to seek to ensure greater fairness in the distribution of fiscal burdens and

12.
through better structure and targeting of the expenditure side of the budget;

13.
Criticises the upward trend of VAT rates in the European Union, which has a regressive effect and
reduces consumer demand; stresses that experience in some Member States has shown that greater revenue
is generated when the tax base is widened, when employment growth causes an increase in consumption
and when the conditions are right for black economy activities to become regularised, a process that would
be endangered by an increase in VAT rates;

Reiterates its support for experimenting with lower VAT rates for labour-intensive services as a struc-
14.
tural element of the VAT system, with flexibility for Member States to apply such rates in sectors of proxi-
mity services that are mainly local and do not distort cross-border competition;.

15.
Supports the Commission's efforts to gear fiscal policy towards more ambitious environmental objec-
tives; considers that such action can promote greater research into, and a greater application of, environ-
mental technologies, thereby developing the European Union's competitive potential in this field; stresses,
however, that action must be taken to avoid placing an even greater burden on poorer households;

16.
Notes that there is a need for an entirely new approach regarding excise duty policy; stresses that a
policy line that is oriented to the determination of the minimum tax rate at the Community level should be
rejected and that a generic code of conduct should instead be adopted, with the objective of encouraging
Member States to approximate more closely their highly divergent rates of excise duty;

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Believes that fiscal policy should generally contribute to requiring industry to internalise external
costs but considers it appropriate to retain or introduce tax and other incentives to promote clean, non-
fossil-based energy sources;

Wednesday 24 October 2007

Considers that an increase in fuel taxes would have a positive environmental impact if economical

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and attractive means of mass transport were available;

Believes that countries that are in the process of catching up are faced with higher external costs, for

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which they should not be penalised;

Stresses the need to continue reducing taxes on employment as an important tool by which to

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achieve the Lisbon Strategy objective of an employment rate of 70 %;

21.
Considers it important for the completion of the internal market to simplify customs legislation and
to rationalise customs procedures with the purpose of reducing the administrative cost for enterprises
engaged in cross-border transactions, maintaining a simplification of enterprises' cross-border compliance
obligations; supports moving towards a simplified system for levying VAT on cross-border sales in the
European Union, for example, by implementing the reverse charge mechanism;

Common consolidated corporate tax base

22.
Supports the Commission's efforts to establish a pan-European and uniform common consolidated
corporate tax base (CCCTB); notes that a CCCTB will lead to greater transparency by enabling companies to
operate according to the same rules abroad as at home, will increase cross-border trade and investment, and
will significantly reduce administrative costs and the possibility of tax evasion and fraud; considers it necess-
ary to introduce measures specifically designed to reduce tax compliance costs faced by SMEs, such as home
state taxation provisions;

Notes that the CCCTB is a policy which may be conducted under the enhanced cooperation mechan-

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ism, as already provided for in the Treaties;

Recalls that the CCCTB will involve common rules regarding the tax base and will in no way affect

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the freedom of Member States to continue setting their own tax rates;

25. Welcomes the Commission's intention to launch the CCCTB in the framework of enhanced coopera-
tion; points out, however, that this is a second-best solution, as the benefits of transparency and lower
administrative costs may be partly mitigated in the absence of a comprehensive Community-wide system;

26. Welcomes the Commission's view that the CCCTB must be uniform and simplify the situation and
recommends, while defining a framework of common standards, the development of a mechanism of allo-
cating revenues among the Member States concerned; considers, furthermore, that in order to establish a
genuinely common unified tax base, it is also important to create comparable or, at best, common registra-
tion documentation for cross-border economic activities;

27. Welcomes the Commission communication, Towards more effective use of tax incentives in favour of
R&D, and highlights the need to share best practices and clarify, to a maximum degree, the compatibility of
such incentives with Community law;

Stresses that green taxation is a flexible policy instrument for achieving a given pollution target, for

28.
providing incentives for technological innovation and for further reducing pollutant emissions;

Encourages the Commission to address the issues relating to the consolidation of accounts, taxation

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and tax administration of the large groups operating across borders;

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Towards a more effective use of tax incentives in favour of research and development

30.
Considers that tax incentives to encourage R&D activities are of great importance for achieving the
Lisbon Strategy objectives, such as increasing R&D spending in Europe, in particular as regards facilitating
R&D+i activities for SMEs; notes, however, that such tax incentives should not be used as indirect subsidies
to national firms;

Is convinced that tax policy should be drawn up in such a way as to induce productivity-led growth
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in all sectors of the economy by allowing a taxpayer to either deduct or claim tax depreciation in respect of
R&D expenditure;

Believes that the technological gap among Member States means that there are differences in tax
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policy and that action should only be taken at Community level when action by individual Member States
cannot provide an effective solution; is of the opinion that the promotion of good practices for the design
of R&D tax initiatives and better coordination of tax policy would help Member States meet the Lisbon
Strategy objectives;

Exit taxation

33.

Urges the Commission to adopt a more proactive strategy with regard to offshore financial centres;

Supports the Commission's view that when assets are transferred to a third country, it is justified,
34.
because of the lack of cross-border administrative cooperation, to require taxes to be payable at the time of
exit;

Tax treatment of losses in cross-border situations

Notes that cases concerning taxation are frequently brought before the Court of Justice of the Euro-
35.
pean Communities and that this is mainly because of the lack of transparency and the high level of com-
plexity of the taxation systems in Europe and calls, therefore, for a simplification of tax codes across the
European Union; believes that, in situations involving cross-border losses by foreign subsidiaries, the double
taxation of parent companies must be avoided, fiscal competence must be fairly distributed among Member
States, losses should not be offset twice, and tax avoidance must be prevented;

36.
Notes that without channels of cross-border loss relief, firms will seek to ensure that their profits are
taxed in countries where the size of the home market is sufficient to generate enough profit to offset
possible losses abroad;

37.
Considers that it is necessary to work towards a system of cross-border loss relief, both for compa-
nies and groups with units abroad; takes note of the Commission communication on tax treatment of losses
in cross-border situations;

38.
Regards the Commission communication on tax treatment of losses in cross-border situations as a
basis for further discussion, specifically as regards the possible solutions, pending the application of the
CCCTB, identified in the communication as regards implementing a system of loss relief and recapture by
the host Member State;

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Instructs its President to forward this resolution to the Council and the Commission.