Aware of the opposition presented the always harmful to national interests or union pact merkeliano , the working poor Barroso decided to use the tide to concoct other covenants backstage with Van Rompuy. Because Barroso to control the deficit and budget cuts I know a little and is well aware that European competitiveness goes through further integration and the elimination of many barriers faced by companies within the Union in order to develop to the fullest. Its goal is economic governance, an environment in which businesses can operate without the intervention of national administrations and their respective interest groups. True, it is still early to confirm tangible progress in economic governance, even small successes are realized, some in the framework of barrosiana Strategy 2020, which emphasized in its design and the need to move towards a tax harmonization, typical workhorse of the Commission. Anyway, this battle crown its first victory with the draft directive tabled by the European Commission yesterday.
Whatever the merits of whether it is beneficial to establish a common taxation in the Eurozone, it seems appropriate to unify procedures in companies with operations in more than one Member State. Here we have a breakthrough and force throughout the EU. This is the announced and expected directive will establish a common basis for the corporate tax to all businesses operating within the Community, articulating consolidated tax base (CCCTB ), which involves harmonizing the tax base in the 27, so that companies operating in more than one Member State are not subject to different rules of calculation. This new directive will involve simplification and reduction of litigation. However, when the privileges of the type of deductions and the collection will remain under national sovereignty, since, as we know, the tax is shielded by the States.
The collection will be made once, although the total amount of taxable income shall be apportioned among the States concerned, and is broken down according to three basic factors known location, assets, employees and sales.
Alongside this single window system for corporation tax, the legislative proposal expected to be accompanied by small business initiatives, including improving funding for improved access to risk capital markets and promoting it big or small banks have easy access to loans from European Investment Bank and EU instruments. Another group of measures is aimed at facilitating cross-border debt collection and revision of the European standardization system, to promote standards for SMEs. Advice was also provided to SMEs in the implementation of the rules of origin labeling.
With the new directive, in practice, European companies will have a single window to file their tax returns in the whole EU, which will prevent up to 27 different tax procedures. It has been estimated that companies will save 2000 million per year in compliance costs of consolidation and they had to take so far. The companies have a single consolidated tax return to a single administration. Not daring to think that this unique foundation push some companies to expand beyond their national borders.
However, this consolidated system will be optional, so not all companies require their application, at least initially. To be seen what effect on European business, although possibly this will be more attractive consolidated basis the territory of the European Union for foreign investment. At the moment, it is expected that the European Parliament gives green light to this proposal from the Commission, and eventually be adopted in the Council where the veto could prevent Irish (remember you have a particular conditionality in the Lisbon Treaty which allows be outside tax treaties), and in any case not prevent this rule is binding for 27, and remember that the Directives are of binding throughout the territory of the Union, but insist that this rule will be of use optional on the part of firms.
As you know, companies will always appreciate the facilities, and this new standard eliminates a barrier and reduces costs, then you will get a good reception in the business world. No doubt the measure will be successful from the point of view of efficiency and competitiveness, and of course job creation as the basis harmonized corporate tax is an old complaint companies with transnational activity.
However, there should be discussion on the desirability of moving towards fiscal harmonization, at least in the eurozone, where there are serious imbalances, such as those that penalize the taxpayer on the basis of nationality and not their income, which no sense in a Union, precisely because the mobility remains very low. That leads me to believe that now is the time to make policy decisions that encourage mobility in European societies, as there is no courage to give state prerogatives.
Removing barriers and flexibility in parallel with a European harmonization legal standards would be an appropriate starting point for promoting a mobile citizenry, something that eventually will become key to boost the economy of the entire European Union, if indeed we all believe in this common project and we do not accept other open economies such as Asia, end up relegated.
As Alesina asked one of his books, is a Parisian prepared to see how Asian tourists buy luxury products in the Champs Elysees that he can not buy? I guess that is to be poor, and I imagine that anyone you like the idea. Is it an exaggerated scenario? Probably, although it seems that we Europeans are losing purchasing power in recent times, have more leisure but less resources. Companies do not have incentives to grow and hire new employees. The answer to the crisis is that our companies must become more competitive and offer something different and valuable. Many fear
tax harmonization because they interpret the tax burden will increase in many States, when in fact it could even be reduced both in individual and state, the first by increasing the number of taxpayers, and the latter by creating a European common fund many Member States would no longer be able to justify their strong fiscal pressures. In the meantime, tax harmonization eliminates distortions in the market and promotes transnational. I do not know if you just make sense to apply now the sole basis, while still taxed according to different criteria in each Member State, which distorts the business itself, clearly in the case of transnational corporations. The internal market would be more effective if the standards and laws to be uniform throughout the territory, which would eliminate the current distortions. I honestly believe the directive in question is a good start but insufficient.
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