Financial Transaction Tax And Switzerland Dominate Discussion With Semeta

Any taxation of the financial sector must be based on the financial transaction tax model proposed by the Commission and Member States should not attempt to use “B or C plans”, Taxation Commissioner Algirdas Semeta told the Economic and Monetary Affairs Committee on Tuesday. The debate also focused on tax agreements being negotiated by various Member States with Switzerland.

Mr Semeta outlined key areas for the coming months and fielded questions from MEPs, mostly about the draft legislation on a financial transaction tax (FTT), tax evasion, particularly to do with tax agreements with Switzerland, and corporate taxation.

Standing up for an FTT

Anni Podimata (S&D, EL), the MEP responsible for Parliament’s position on the proposed FTT, legislation praised Mr Semeta for not giving in to pressure from some Member States to move towards other taxation models for the finance sector. She also asked the Commissioner for his views on pushing ahead with enhanced cooperation and why the Commission had not yet published its additional impact assessment, which shows that an FTT will have a beneficial effect on growth. Greens MEP Emily Turunien (DK) told Mr Semeta that by not publishing this impact study the Commission would lose out to the finance lobby’s campaign, which has compared the FTT to a “neutron bomb”..

Mr Semeta insisted that Member States should take care not to deviate substantially from the Commission’s proposals and undertook to publish the impact study ahead of the next finance minsters’ meeting. He added that he was surprised at how the finance lobby seemed unable to supply figures to substantiate their claims that an FTT would have a very damaging impact. Although advocating a deal with 27 countries, Mr Semeta did not totally exclude FTT legislation applying to just a part of the EU.

Switzerland savings taxation agreements

MEPs asked about what information the Commission had about a number of Member States negotiating tax agreements with Switzerland bilaterally and to what extent the Commission considered this legal. Mr Semeta insisted that any such bilateral deals needed to respect EU competences. He also acknowledged that Greece was one of the countries negotiating with Switzerland. For his part, Sven Giegold (Greens, DE), said that the planned German – Swiss agreement was “effectively stalled” for the moment.

More broadly, on tax evasion, Ivo Strejcek (ECR, CZ), asked whether tax fraud is not best tackled by lower taxes and simpler rules. Mr Semeta replied that this was not the case, as even low tax regimes experienced tax fraud. Moreover the Commissioner said that in such times of belt tightening, it was not possible to lower taxes.

Corporate taxation

Olle Schmidt (ALDE, SE), asked whether it was possible for just a few Member States to move ahead with setting up a common consolidated corporate tax base (CCCTB) whereas other MEPs asked whether it was best for such a system to be optional or mandatory. Mr Semeta replied that he indeed did consider enhanced cooperation possible and that it was best to have an optional system, because not all businesses are involved in cross-border operations.

The Economic and Monetary Affairs Committee will adopt its position to the Commission’s legislative proposal for a CCCTB on Wednesday 21 March. It is also expected to adopt its position on the FTT proposal in late April.