European Committee of the Regions asks to put an end to tax exemptions for aviation fuels
The European Committee of the Regions - the EU's assembly of local and regional authorities - adopted an opinion supporting the shift of tax decision-making in the EU from unanimity to qualified majority voting during its plenary session on 26 June in Brussels. The opinion prepared by the French mayor Christophe Rouillon highlights the need for joint efforts in tax matters to tackle the challenges of tax fraud and cross-border trade but also climate change as their impact is felt locally.
Globalisation, digitalisation and changes in the service industry have led to a rapid transformation in the economy, with businesses, capital and services moving freely within the European single market. In order to ensure fair taxation throughout Europe, Member States need to update their tax rules in a coordinated way. However, taxation at EU level is the last policy exclusively subject to voting by unanimity. This reduces joint policies to the lowest common denominator, making progress too slow and unambitious to face current challenges.
Christophe Rouillon (FR/PES), mayor of Coulaines and rapporteur on the CoR opinion "Towards a more efficient and democratic decision making in EU tax policy", supports the European Commission's proposal to shift tax decision-making from unanimity to qualified majority voting: "Taxation should not become the weakest link of European integration. Unanimity voting in tax matters has made any substantial reform impossible, despite the latest technological developments, market changes and a more mobile tax base. Member States should understand that a joint European approach allows for more tax revenues and more fiscal fairness than all of the national tax sovereignties combined and the loopholes that this system encompasses. And there is very substantial support in the opinion for a more ambitious EU tax policy. The CoR would, however, like environmental taxation and in particular taxation in the aviation sector to be included among the priority issues moving forward which could offer great potential for possible EU own resources".
Every year public budgets in the EU loose between EUR 50 and 70 billion due to tax avoidance strategies or between EUR 160 and 190 billion if the estimated loss from individual tax arrangements of the big multinationals is included. Stronger coordination in tax issues would not only help to step up the fight against financial crimes, aggressive tax planning and unfair tax competition, it would also reduce administrative costs for companies working across borders, potentially saving firms EUR 15 billion per year.
"Joint efforts at European and national level are necessary to ensure fair tax competition, reduce the administrative burden for companies working across borders as well as safeguarding public budgets from losses due to tax evasion. Only tax revenues which are fully and effectively collected will allow us, as local and regional authorities, to provide our citizens with quality public services, from education to health, affordable housing and public transport", highlights Mr Rouillon.
The Committee's members endorse the suggested step-wise implementation of the new voting systems starting with initiatives which do not have a direct impact on Member States' taxation rights, bases or rates, but which are necessary for improving administrative cooperation and mutual assistance in the fight against fraud and tax avoidance. The Committee also wants the first stage to cover initiatives intended to help EU companies comply with tax obligations which, especially for SMEs, is a major challenge when working across borders.
Recent CoR opinions on tax matters:
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