Matt Carthy MEP raises concerns over EU tax proposal
Sinn Féin MEP Matt Carthy has said the European Commission’s proposal for a common consolidated corporate tax base (CCCTB) is unlikely to achieve its stated goal of ending profit-shifting by multinational corporations within the EU.
Carthy, a member of the European Parliament’s Economic and Monetary Affairs (ECON) Committee and the Panama Papers inquiry committee, was speaking during a debate on the CCCTB in the European Parliament in Brussels today.
MEP Carthy said;
“I am approaching this proposal both as a very strong supporter of both tax sovereignty for member States, and of global tax justice.
"I am opposed to the further transfer of economic and fiscal decision-making powers from democratically elected governments in very diverse economies across the EU to the Commission, though I welcome the cooperation of member States in setting EU-wide rules for tackling cross-border tax avoidance and tax evasion by multinationals.
“My main concern is that member States are being asked to transfer further powers to the Commission in exchange for the promise that this new system will end the ability of multinationals to shift profits – but shortcomings in the proposal mean this goal is unlikely to be achieved.
“The idea behind unitary taxation is that you look at the activities, profits and taxes paid by a multinational corporation in their entirety. But for unitary taxation to work as a means to end profit-shifting it needs to be global.
“Implementing the CCCTB at an EU level alone runs the risk that current losses from EU members to the rest of world could be locked in, as could the exploitation of the rest of the world by some member States. An EU-only approach could eliminate the incentives to profit-shift within the EU, but increase the incentives to shift profit out of the EU.
“Additionally, it’s vital that the accounting base is consistent in calculating the tax base within a group – otherwise accounting tricks will just replace existing tax tricks. We don’t have this at the moment and this problem must be addressed by the Parliament in its report on this proposal.”
Carthy informed MEPs that the left group in the European Parliament, which Sinn Fein is part of (GUE/NGL), is due to publish a study next month on the impact of the CCCTB on the tax revenue of member states. While it’s still under preparation, one of its central findings on the effect of loss consolidation.
Concluding his remarks, Carthy said;
“The left group in the Parliament is due to publish an academic study that shows that significant declines in corporate tax bases across the EU would result from loss consolidation, likely with no correspondingly large benefit if there was no switch to unitary taxation and formula apportionment at same time – i.e., if the common tax base is introduced first without the consolidation aspect being implemented at the same time.
“We need reliable estimates of the impact on tax revenue of member states, and to take steps to avoid sudden shocks; and member states have very justified concerns about potentially having to operate two tax systems in parallel. I’ll be raising all of these issues and others as the GUE/NGL negotiator on this proposal in the Parliament.”