Debate: Fair and simple taxation supporting the recovery strategy
Date: WEDNESDAY, 9 MARCH 2022
Speaker: Luděk Niedermayer
Country: Slovenia
Language: EN

By the vote in this plenary, we will conclude the work that has lasted for more than a year. With my colleagues, we had many expert meetings and we received a very good report from the European Parliamentary Research Service (EPRS). This was about how to formulate the recommendations, how to improve the EU dimension of tax policy, how to improve the collection of taxes due, to reduce the cost of compliance and also uncertainty for taxpayers, and to better use the technology of the 21st century. The result is the report with a recommendation to the Commission on fair and simple taxation supporting the recovery. It refers to the Commission Action Plan and the 25 initiatives in the area of VAT, business and individual taxation. The report also contains a reflection of the Commission’s work, including the more recent communication of business taxation and the work done by the OECD. The war in Ukraine has, in my view, increased the urgency of this topic. There will be consequences of the war on the EU economy as well as on the global economy. Surging energy prices are one of the most visible consequences. The growth of the EU economy will be negatively affected, and I believe that there will be a justified case for some well targeted and efficient fiscal interventions. Both these facts – the slowing down of economic growth and fiscal intervention – will lead to a higher fiscal deficit. In combination with the impact of the COVID crisis, countries will end up with higher debt, fiscal deficit and the urgent need to put their fiscal houses in order. Usually, the measures should concern both sides of the budget, but instead of increasing taxes it would be much better to properly collect the taxes that are due. Also, by reducing the cost of compliance, companies will be left with more money to invest, to grow and to promote economic growth. While tax policy is mostly in the hands of the Member States, there is also a strong EU dimension. A significant part of tax fraud or tax evasion has a cross-border dimension, and the high cost of tax compliance is a reality, especially for SMEs doing business in the single market. I believe that the European Parliament should play its part in pushing legislators to reduce the risks and cost to honest taxpayers as well, and fight to prevent tax evasion, tax avoidance and tax fraud. Digitalisation can help greatly. During our work on the report it became clear that some Member States are lagging behind. There is an increasing risk that the development of a digital system would not go hand in hand with the creation of standards simplifying tax compliance in the single market. This risk is rising. That is why we call for the creation of a single standard and development of a digital mechanism for tax compliance, doing so early enough before countries start to create their own, incompatible standards. I mentioned the SMEs that are the foundation of our economy. Instead of talking about support, we should, among other things, focus on ensuring that they do not pay huge amounts of money just to ensure tax compliance when they operate in the single market. We also ask the Commission to consider the introduction of a unique pan-European income tax regime for small enterprises and start—ups. We also want to address the issue concerning the uncertainty of tax residence. We know that the VAT gap is large and, according to experts, it will become even higher after COVID. We propose a number of ways to reduce this gap. It is also essential to simplify procedure. That’s why we recommend the Commission moves forward the adoption of the single EU VAT registration process and the single EU VAT number by 2023, and to consider standards for an online reporting obligation, especially in cross-border trade. In the report, we also look at business taxation communication, and we very much welcome it. For example, we would like to support it through the introduction of a single and harmonised corporate income tax return form to support the BEFIT framework. Furthermore, we call for the debt-equity bias to be addressed. Obviously, we support the OECD initiative too. We also echo the previous Commission presentation statement concerning Article 116 in order to promote the change needed. I believe that this is a good list of initiatives and I was delighted to see that, at the ECON vote, there was very wide support. It was reached by very good, open—minded cooperation among all the rapporteurs, and I want to thank them for that. Last but not least, the possibility to consult with the Commission was of great help. Let me also thank our support staff, our assistants and the group employees. Let me conclude here and wish that the improvement of EU tax policy will play an important role in allowing fiscal policy to address unprecedented challenges in the consolidation phase later on, as well as in promoting the recovery that will hopefully come in the near future, not just here but also, I hope, in Ukraine. Finally, I would ask you to please support our report.