The proposals for a US tax reform presented yesterday in Washington could change the current progressive international tax climate back into a world of policies made for the rich by the rich.
Lowering the corporate tax rate to 15% and moving towards a territorial taxation system would encourage a race-to-the-bottom in corporate tax rates and thereby largely favour the big and multinational enterprises by imposing unsustainable competitive disadvantages on the rest of the international business sector.
S&D Group spokesperson on economic and monetary affairs, Pervenche Berès, said:
“We strongly deplore such a move in the current context of otherwise international cooperation in the field of taxation. Different revelations have shed light on the lack of efficiency and adequacy of our tax systems and there have been clear political answers from both the G20 and the Organisation for Economic Co-operation and Development (OECD).
“The announced proposal risks to undermine the ongoing reform efforts, in which the EU plays a leading role. We will keep pushing for deep and fair tax reforms and we will not accept any foreign or internal threats to the financial stability of the EU.
“A fairer tax system is not only in the interest of the EU, rather this is a global issue which sees demands of radical change from citizens from all over the world.”
S&D Euro MP and European Parliament’s rapporteur on the CCTB proposal, Paul Tang, added:
“This is a return to a beggar-thy-neighbour-policy of the thirties. Competitive devaluation of exchange rates could start a further race-to-the bottom in corporate tax rates. To the sole benefit of multinational enterprises (MNEs), smaller firms and workers, both in and outside America, will be paying the price, directly or indirectly.
“The European response must be responsible, socially and politically. We must stop the race-to-the-bottom with Europe and with the rest of the world, and at the same time set global standards for fair corporate taxation.
“The Common Consolidated Corporate Tax Basis (CCCTB) is the opportunity to level the playing field between large corporates and the small firms but is also an opportunity to set global standards right. A common and consolidated corporate tax is the best response of Europe to the shameful move by Donald Trump.”