Debate: Role of tax policy in times of crisis
Date: MONDAY, 11 DECEMBER 2023
Speaker: Paolo Gentiloni
Language: EN

So, first, fair taxation is the cornerstone of a more resilient Europe, and has been central in our approach to tax policy. With our legislative proposal, in our economic surveillance, and through our international engagement in the global agreements, we are strengthening our framework against aggressive tax planning, tax abuse and tax fraud. Also, simplifying the tax system is a priority: reducing the administrative burden, making it easier for citizens and firms to comply with their obligations, removing tax obstacles in the single market. This is how on the tax side we can help free up resources for investment, for job creation, and maintaining Europe’s competitive edge. This is the goal of the package of proposals we presented in September for larger and smaller firms alike: BEFIT, Head Office Taxation, and the Transfer Pricing Directive. We are encouraged to see that the European Parliament is working on this proposal at full speed. As agreed jointly by the Commission, Parliament and Council, BEFIT is also a candidate for the next generation of own resources. On this point, let me add that the Commission has fully demonstrated its commitment to fostering new revenue for the EU budget, as per the Interinstitutional Agreement with the European Parliament and the Council of 16 December 2020. We have presented two batches of new own resources, including ETS, CBAM and the implementation of Pillar One of the Global Deal on Taxation. Further reflections are ongoing around the taxation of the financial sector. Indeed, strengthening our framework of own resources is essential to help repay the borrowing under NextGenerationEU, and to finance European public goods and investments in European projects, in particular around the green and digital transition. We know how pressing the need to phase out fossil fuel is. We pledged to reach carbon neutrality, and we know we won’t get there without massive investments. Yet our tax signals are sometimes in the opposite direction. We have a proposal on the table to address this: the revision of the Energy Taxation Directive, which has been languishing for too long, almost three years now. The temporary solidarity contribution, responding to a specific crisis situation, has already raised an estimated EUR 17 billion of additional proceeds for Member States to support households and companies affected by soaring energy prices. But we need to ensure structural solutions to generate proceeds for Member States. The time has come to align the taxation of energy products with our climate policies, by removing outdated exemptions and reduced rates that encourage the use of fossil fuels, and by promoting clean technologies instead. With COP28 coming to an end tomorrow, it is time to commit to move forward with the review of the Energy Taxation Directive. The own-initiative report before us today, as well as the other report to the Plenary, touch on many of these aspects. So let me thank again the rapporteur for her work and, more broadly, the European Parliament, for being a staunch ally of the Commission for ambitious taxation policies throughout this mandate. Over these past four years, we have tabled several initiatives that have garnered the Parliament’s support. Despite the best efforts of succeeding Presidencies, some of these initiatives are still stuck in the Council. The most egregious example, in my view, is ‘Unshell’. As the European Elections draw nearer, how can we explain to our citizens that we had a chance to end the abuse of shell companies and did not seize it? So let me be clear. The Commission will not stop pushing for an ambitious tax agenda, one that delivers better outcomes for our citizens and businesses, and let us continue to work together.