Eurocommissaris Algirdas Šemeta: Belastingbeleid levert bijdrage aan Europees groeiprogramma (en)

Algirdas Šemeta

EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud

The Contribution of Tax Policy to the European Smart Growth Agenda

Figures and graphics available in PDF and WORD PROCESSED

European Economic and Social Committee Conference "An EU Roadmap for a Sustainable Economic and Social Recovery"

Brussels, 18 March 2010

Mister President, Ladies and Gentlemen,

I am very pleased to have the opportunity to participate in this Conference on an EU Roadmap for a sustainable Economic and Social Recovery. This topic is of major importance given the challenges we are facing in Europe. For the Commission, the main focus needs to be placed on the development of smart policies to lead the way out of the economic and social crisis and into an environmentally sustainable social market economy. The Europe 2020 Strategy proposed by the Commission on the 3rd March responds to this need. It reflects what needs to be done today and tomorrow so that we all together reap the benefits in 10 years time. Of course, this strategy is not an end in itself, and can only be achieved with full participation - I would even say "inclusion" - of the social partners as well as civil society at large.

Where do we start from?

Over the last years we have witnessed the worst global downturn since the Great Depression. The financial and economic crisis has put severe strains on national budgets. On the one hand, the economic downturn has resulted in lower-than-expected fiscal revenues; on the other, expenditures have soared as a consequence of the massive and unprecedented fiscal interventions put in place in order to stabilise the financial and banking sectors and to stimulate aggregate demand. The latest budgetary projections point to growing fiscal imbalances.

The global downturn has taken a heavy toll on developed and developing countries, both from an economic and a social point of view. Addressing this legacy in a credible way is a major challenge for policymakers who converge on the need for reinforced economic governance within the Union.

Although sensitive, the issue of a reinforced coordination of our tax policies is part of this governance framework and provides us with the opportunity to re-examine national tax systems and their contribution to our smart growth objectives.

Taxation policy is indeed an important element in ensuring the proper functioning of the Single Market which in turn will be crucial in helping EU countries achieve renewed growth and competitiveness. The ultimate goal is to ensure that taxation systems can profitably contribute to the fostering of employment and long-term growth, while delivering the necessary level of tax revenue - which has become a critical objective after the crisis.

Where do we want to go and how tax policy can contribute?

As the new EU Commissioner for taxation I put a special emphasis on the short to medium term perspective and strongly believe that we should concentrate mainly on 4 objectives leading to concrete instruments which could contribute to economic and social recovery.

First, we need to structure our tax systems to create an environment beneficial to citizens and businesses within the Single market.

Beyond the legitimate preoccupation of raising revenue, a good tax system should aim at promoting efficient, effective and fair taxation for the benefit of citizens, businesses and Member States. It also needs to eliminate obstacles in the Single Market, which are holding European citizens and businesses back - for example, double taxation, distortive measures and red tape.

One of my main priorities will be to identify and tackle tax obstacles for EU businesses and citizens so as to reduce compliance costs and administrative burden. I believe that we need to seek out tax costs that create "bottlenecks" restricting cash flow which is the lifeblood for business.

One example is the need to ensure that access to finance by SME's, notably through venture capital funds, do not suffer double taxation within the Single market.

Another example is the much needed progress towards a Common Consolidated Corporate Tax Base regime available for businesses in all Member States.

Finally, experience has shown that, to improve the coherence of the Single Market rules and the business environment, some of the approaches chosen in the excise duty area and in the VAT system need to be revisited.

Secondly, we have to address quality of our tax systems from smart green and inclusive growth prospective.

In the assessment of the current tax systems, it is important to tackle the distortions that could have potentially contributed to the creation of a crisis-prone economic environment, such as the differential fiscal treatment of debt and equity financing.

The reforms aimed at shifting tax structures in a desirable way could also be considered. A good tax system should create the right incentives to invest in research, development and innovation as well as in education and training. It has to encourage domestic entrepreneurship, and attract foreign productive capital. In this respect, the economic literature has shown that consumption taxes, property taxes and environmental taxes are the most growth friendly, notwithstanding their potential equity implications.

Recently, increases attention has been raised towards options for taxing the financial sector. This would serve a twofold purpose of having financial intermediaries share the burden associated with government interventions in the banking system, as well as complementing additional regulation against excessive risk-taking. The US administration has put forward a proposal for a "Financial Crisis Responsibility Fee", a similar instrument to tax certain assets of banks has been introduced in Sweden.

Should this path be followed more widely? To answer this question, we need first to get the analysis right and to compare our own findings with those of its international partners to identify the most promising instruments.

Thirdly, we need to meet our environmental goals and remain competitive at a global level.

The economic leaders of the future will be those who manage to combine high productivity with environmental efficiency. I am convinced that taxation can have a positive impact on reaching our environmental objectives, and I intend to push forward a "green" taxation agenda.

I will start this agenda by pushing the finalisation of the ongoing work on the revision of the Energy Taxation Directive. Fighting climate change and rationalising energy consumption are amongst the highest priorities of the EU. The revision of the Energy Taxation Directive would provide for an adapted and modernised framework of rules for the Single market. It should introduce framework rules for CO2 taxation for emitters not included in the EU emission trading system streamline remaining energy taxation to make it neutral and eliminate distortions.

The green taxation agenda can allow us to also identify provisions in our tax systems that give negative incentives to citizens and businesses when it comes to protecting the environment. We, in the Commission, will need to work closely with the Member States to correct these negative incentives.

Finally, we need to coordinate our actions where necessary

We must never forget one of the most important elements for success. This is the need to work together, as a Union.

The Single Market and the euro have resulted in interdependence amongst Member State economies. The success of coordinated initiatives to prevent financial and economic meltdown shows that, in an integrated economy, working together as a Union can deliver the best results. Hence, there is substantial scope for coordination with respect to all these possible tax policy options.

The institutional architecture at the EU level already offers various tools for such coordination. My intention is to mobilise those tools to ensure that tax policies are coordinated where deemed necessary and in the face of difficulties to seek creative and workable solutions.

Coordination is for example key in the fighting against tax fraud and evasion, which deprive Member States of billions of Euros each year. I will continue to work on good governance, both at EU and international level, and press for an early agreement on a number of key proposals currently on the table of the Council. For all these reasons, it is imperative to acknowledge that we must work together, not only with the Member States but also with Business Communities, Social partners and civil society at large.

In this respect, I am committed to ground my ambitious agenda on extensive consultations and sound analysis.

Mister President, Ladies and Gentlemen,

I sincerely hope that these reflections on the agenda within my portfolio for the coming years will help inspire a useful debate on how best to maintain the necessary economic and social support measures while reconciling them with constraints on public finances.

I also hope that this Conference will support the orientations defined by the Commission to pave the way towards a sustainable economic and social recovery. Along with the overall objectives, it is of the utmost importance to take forward immediate short-term priorities which could bring rapid and concrete outputs. I am confident that that this exchange of thoughts and ideas, and the opinions expressed during the Conference, will help to enrich the understanding of where we want to go and what measures are the best targeted and most beneficial to achieve our objectives, to the benefit of all partners.

I wish you all every success for the Conference and thank you very much for your attention.