A stronger economy, social justice and jobs
#TheFutureIsYours An economy that works for you
Every year, member states lose billions in revenue through tax evasion and avoidance. Companies and individuals use loopholes in national, European and international regulations to reduce their tax burden. As is so often the case, the damage is borne by society. Honest entrepreneurs and taxpayers are thus burdened twice. As the countless Lux-, Swiss- or Bahamas-Leaks, the Panama Papers or the FinCEN Files have shown, these are by no means individual cases, but an industry worth billions.
Not only overseas, but also in Europe there are member states like Ireland, Luxembourg or the Netherlands, that profit from these practices. It is time to clearly call out tax havens and to take countermeasures, such as a global/EU-wide minimum tax.
Report inappropriate content
Is this content inappropriate?
47 comments
Conversation
The EU should levy an excise on luxury trade marks just like on tobacco or on fuel. The excise cannot be circumwent by corrupted member states like tax on profit as the minimum excise rates are solely EU competences.
Apple and Porsche make profits at least 30% of their income compared to similar performance non-luxury brands. The extra profit is possible only by the protection provided by the trade mark law. Nobody would buy a Louis Vuitton for thousands bag if it could be made by others, because prestige is originated from uniqueness. That prestige can be taxed at a fix rate like 10k per car or 200 Euros per phone. It would even make the products more desirable for prestigeous spenders.
Sorry, I meant that excise CANNOT be circumvented by hacking member states like mine or Luxemburg and Ireland.
Prestige of a product usually comes from the high price, rarely from its superior perfomance. I suggested to elevate the prestige of a EUR5000 bag by further 1000-2000 thousands. They are all made in Bangladesh for a labor cost of 8 cents per piece.
This blog is blind to the current legislation.
In the EU the single member state has sovereignty over the tax regime, not the EU.
If Mercedes sells a car in the USA from their German group and concludes the contracts and agreements via the internet and digital communication, the tax on the profit is in Germany. The USA does not impose a tax on their sales because they used digital means. No. If they want to regulate the trade, it is done in the trade agreements, not in the national tax regime.
If Amazon sells a product in Germany from their Irish business, you want Germany to tax that transaction because they use digital means and Ireland will impose a tax as well. What is the difference between Amazon and Mercedes?
What we need, is a business environment for the new economy, that creates a competitive European pendant to Amazone. Taxing the Americans because they are faster, more ingenious, faster, and more goal-seeking than us will never make us efficient and forward-thinking.
Excise is NOT member state authority. It can be levied by the EC, and member states cannot grant any discount on it.
I would not put Amazon and Mercedes in the same group. Amazon has adopted useful innovations contributing to the development of the trade. It is not a luxury brand. Mercedes sells rebadged Renaults at double prices. They forgot how to make durable cars. I know because I had one full of ridiculous problems like breaking door handles (interior, made of metal). There is no technical performance in exchange for the extra price. They can charge a premium just because the law protects their trade mark. The excise would make them pay for that protection if the logo is not used to differentiate a superior quality.
Like the luxury tarif set in the old "Contribución de Usos y Consumos" indirect tax during postwar in Spain? It's becoming commonplace the idea of moving some progressive power of tax systems from direct taxes to indirect taxes. But it sounds to me like a third world country's way of taxation.
The US, Australia and Norway -as typical 3rd world countries- apply luxury taxes, not to mention gas guzzler tax on cars (US) or CO2 emission penalty for cars in the EU.
The suggested trade mark excise is like a high end income tax however it applies only when the income is spent.
Hi Gergely,
I think your interesting ideas deserve to be a proposal on their own. While they are certainly tax related, they do not directly adress the problem of tax avoidance which is center to the proposal on fighting tax havens.
Conversation
If you want a company or a person to pay taxes in your country, you should lower the taxes in your country.
those options are to be avoided since they could also just increase sales tax and other taxes that cannot be avoided thereby creating a horrible tax environment for foreign company's and al the while not creating a sustainable model of taxation there are many ways to do this but yours just results in a race to the bottom while mine results in a race to the top while still not really helping anyone
1. We need everyone to pay their fair share in taxes, because companies and individuals are highly dependent on public services, such as trained workers (public schools/universities), roads & infrastructure or public funded research. A certain amount of taxes is needed to finance these public services like education, research, infrastructure, health care, etc.
2. Everyone should pay taxes according to their revenue/salary. We need a level playing field, so that a small company, a startup or a bakery do not have a higher tax burden than a big multinational or rich & powerful individuals. Otherwise we not only harm solidarity in our society, we also harm a fair and innovative competition in our market economy. We want the best ideas, products and services to succeed, not the ones with the most tax lawyers, accountants and lobbyists.
3. Your proposal does not adress any of these aspects.
corruption is the only matter that anyone can be against and takes a lot of money that could be invested in education, the EU should have a real proposal for that because in the 21 st century it is still something that hasn't been stopped, and sometimes it feels like they don't really want to solve it. end fiscal paradises and act serious to those banks that have done worse than countries that have suffered more trying to help their citizens first
Race to the bottom!!!
Othmar KARAS (EP-Vizepräsident) schätzte den Steuerentgang durch den Wettlauf der EU-Staaten gegeneinander auf 825 Milliarden (825 mal 10 hoch 9) € jährlich EU-weit. Für eine Änderung braucht es allerdings eine Änderung des EU-Primärrechts. Einen Anstoß dazu könnte der Vorschlag von US-Präsident Biden liefern. Allerdings ist die Unternehmensbesteuerung weltweit falsch angesetzt. Statt der Kapitalreserven (Körperschaftssteuer) gehören die entnommenen (und nicht reinvestierten) Gewinne besteuert, da sonst die Unternehmen ihre Eigenkapitalbasis gering halten, was in Krisen gefährlich ist.
Der Steuerentgang durch Steuerflucht via Briefkastenfirmen ist ähnlich hoch. Er wurde 2016 in "Panama Papers" auf 1 Billion (= 10 hoch 12) € geschätzt. Zur Abhilfe sind die dort empfohlenen Transparenzregeln und ihre sanktionsbewehrte Durchsetzung erforderlich. Diese sind auch zur Vermeidung von Geldwäsche und Bilanzbetrug (Wirecard, Commerzialbank, Greenhill) unabdingbar.
I 1000% agree with this proposal, we have seen too many times the damaging effects of race-to-the-bottom tax policies between states.
I think that achieving tax justice is key for the survival of the EU. Saez and Zucman (2019) wrote a very good book ("The Triumph of Injustice") on this subject. I wrote a bit about a specific measure that they propose, apportioned profit tax, but their book builds a true proposal that should be adopted by the EU as soon as possible.
You you want to check my thread in the social democrats forum, please find it here: https://socialistsanddemocrats.eu/forum/achieving-tax-justice/how-can-we-make-sure-digital-giants-facebook-and-google-pay-their-taxes
Conversation
Easy to agree however, difficult to implement e.g. Ireland will resist global corporate tax rate, Dutch do not bother even to comment and Lux has disappeared.
Low hanging fruit might be just to be better in collecting the taxes that are already now due. This will link to the EU Next Gen recovery fund and Digitalization. Payback of digitizing tax collection systems, using AI, blockchain etc would make a difference. Committing to use even 5% of the fund's monies to making tax collection systems better would make sense.