Labour MEP Alfred Sant will be voting against a report calling for EU coordination on corporate taxes because it will lead to tax convergence.
Dr Sant told the European Parliament’s Economic and Monetary Affairs Committee that he opposed the convergence of corporate taxes.
“I am all out for transparency in reporting how taxes are being applied, but I am very dubious about proposals for convergence of taxation among all EU states,” he said.
He was reacting to the draft report ‘Bringing transparency, coordination and convergence to corporate tax policies in the EU’, which was presented to the committee.
I will be voting yes for transparency but not yes for convergence
The European Parliament authorised the drafting of this report last year after the Luxleaks revelations by a consortium of journalists showed how many multinational companies struck secret deals with the Luxembourg Finance Ministry, which allowed them massive tax reductions.
Malta, which uses low taxation as a means to attract foreign investment, has consistently opposed moves towards tax harmonisation across the EU. Low corporate taxation is a key economic tool for other countries like Ireland and Luxembourg. Taxation is a national matter over which the EU has no jurisdiction but bigger countries have pushed for greater harmonisation. The UK is another opponent of harmonisation.
Dr Sant said the report opened the prospect of coordination among member states in setting taxation policies that would lead to tax convergence.
“While coordination was acceptable when carried out to secure the same approach across Europe towards transparent reporting regarding how taxes were being levied on companies, this should not mean that coordination had to be carried forward to include convergence of national tax systems,” Dr Sant said.
He added the report had to distinguish between policy coordination to ensure transparency and coordination to ensure tax convergence, which was not acceptable.
“When we vote, I will be voting yes for transparency but not yes for convergence,” Dr Sant said.