End tax havens in the EU! Remove veto rights on tax matters from EU Treaties

Why is this important?

Governments in the European Union need to invest massively in the transition towards environmental sustainability, in the improvement of public services (schools, social welfare, hospitals, justice) and in the maintenance of public infrastructures (railways, public transport, rural roads, bridges).

They lack the money to do so.

Money is present: we never were, collectively, as rich as today. But that money is concentrated in the pockets of the ultra-rich and of multinational corporations that evade their tax duties and hide their assets in tax havens, including within the European Union.

This could be changed if the European Union had the capacity to set minimum taxation levels and uniform taxation bases - but the current rules state that fiscal matters are decided by unanimity of Member States. The tax havens in the EU hence have a veto right, and nothing moves. Instead, EU Member States engage in a self-destructive race towards ever-lower tax rates for the wealthy and for corporations.

The report by the Committee on Constitutional Affairs (AFCO) of the European Parliament on amendments to the EU Treaties was proposed by 5 co-rapporteurs from a a broad political spectrum (conservatives, social democrats, liberals, greens, far left), This report includes an abolition of veto rights of Member States in tax and fiscal matters (Amendment 130). This would be a revolution. It would enable:

• EU-wide minimum tax rates on wealth, inheritance or income;
• EU-wide minimum corporate tax rates;
• “unitary” taxation at the scale of the EU = corporates are taxed in the Member States where they are active, not in the tax havens where they transfer their profits to.

This abolition of Member States’ veto rights in tax and fiscal matters must happen.

The next step is to set up a Convention on the reform of the Treaties. The decision on the calling of this Convention will be taken at the next European Council (that gathers the Heads of State and of Government), by a simple majority, on 21 and 22 March 2024. Climate, the environment, social justice cannot wait. The moment to decide is now, at the European Council of March 2024, with a Convention in place in April 2024.

(CosmoPolitical Cooperative SCE is a pan-European cooperative for radical transformation towards social justice, sustainability and democracy)

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Additional information on the report of the AFCO Committee of the European Parliament on amendments to the EU Treaties

The amendment to the European Treaties proposed by the AFCO Committee of the European Parliament that removes the veto rights of Member States in fiscal and taxation matters is the following:

Amendment 130 to the Article 113, Treaty on the Functioning of the European Union

In addition to the removal of unanimity voting in taxation matters, the proposals of the AFCO Committte of the European Parliament cover a broad spectrum of improvements to the democratic functioning of the EU, and to its environmental and climate policies:

• a fully-fledged right of legislative initiative for the Parliament, and a full capacity to decide on the EU's long-term budget;
• new rules for the Commission: limiting its size to 15 Commissioners (instead of 27), making its President to be elected by the Parliament, enabling the elected Commission President to choose the other Commissioners based on political preferences (with geographic and demographic balance in mind);
• significantly greater (and needed) transparency in the Council of the European Union (that gathers representatives of Member States) by publishing EU member state positions on legislative issues;
• more powers for the EU on:
  • climate and biodiversity;
  • public health, civil protection, industry, and education;
  • energy, foreign affairs, external security and defence, external border policy, and cross-border-infrastructure.

The proposals made by the AFCO Committee of the Parliament are the translation, in legal language, of the proposals of the Conference on the Future of Europe, a unique exercise of participatory democracy at the scale of the European Union in the years 2021 - 2022, which converged towards the gathering of 800 randomly-selected citizens to draft, amend and adopt proposals for a reform of the European Union.

Additional information on the report adopted by the full European Parliament

On 22 November 2023, the full European Parliament amended this report by its Committee on Constitutional Affairs, and adopted a much weaker document, in which in particular all references to an abolition of veto rights by Member States in taxation and fiscal matters have been removed.

Additional information on a recent failed attempt to prevent tax avoidance by corporations at EU level

In 2016, the Commission proposed a set of rules leading to unitary taxation at the scale of the EU: the Common Corporate Tax Base and the Common Consolidated Corporate Tax Base. The EU Council failed until 2021 to reach any unanimous agreement, so that the Commission withdrew its proposal and proposed in September 2023 a much weaker “Business in Europe: Framework for Income Taxation (BEFIT)” proposal.

Photos by: 

• Arif Kemal Köroğlu
• Nataliya Vaitkevich