The European social contract is broken. The largest companies are no longer contributing adequately to the provision of the public services and infrastructure they use. If the European project and single market are to survive and thrive, there has to be an effective EU taxation system. The small amounts paid in tax by some of the most profitable companies in the world are undermining citizens’ belief in government, in politicians and in Europe. [...]
The European Union has made feasible tax-reform proposals and the Organisation for Economic Co-operation and Development has developed corporate-tax reforms for the world, through its ‘base-erosion and profit-shifting’ process. Both are making progress but this is far too slow in terms of agreement among states. Europe needs fair taxation of companies now, when revenue is so urgently needed. [...]
It is not the rate of tax which is the issue but the actual tax paid. The EU should move from seeking ‘harmonised’ tax rates to co-ordinated rates within bands—say between 15 and 25 per cent. This would allow peripheral and poorer countries to set lower nominal rates if they wished. What is needed is to close gaps between nominal and effective rates and eliminate tax breaks. [...]
Europe should establish a well-funded European tax agency, ‘Eurotax’, with wide powers of investigation into tax evasion and avoidance by wealthy individuals, companies and criminals. Eurotax would implement tax policy, including the co-ordination of tax assessments and collection. With a single market, the EU needs one tax body to oversee taxation in this globalised world.
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