Here it is at last: the debated proposal for a Directive on a common system of financial transaction tax. This type of tax was initially proposed by the economist James Tobin.
The idea is to tax a great number of financial instruments – including instruments which are negotiable on the capital market, money-market instruments (with the exception of instruments of payment), units or shares in collective investment undertakings (which include UCITS and alternative investment funds) and derivatives agreements. The tax rates will be set by Member States, but must not be less than 0.1% of the taxable amount in most cases.
According to the Commission the new tax will have progressive distributional effects, i.e. its impact will increase proportionately with income, as higher income groups benefit more from the services provided by the financial sector.
The Commission has put forward its proposal for the new Multiannual Financial Framework of the European Union for the period 2014-2020. The Multiannual Financial Framework is the main budgeting document of the EU for the seven-year period, and little can be changed once it is adopted. The proposal has to be approved by the Member States and the Parliament.
The main innovations:
- A new fund for financing infrastructure, the Connecting Europe Facility that includes a preliminary list of transport, energy and ICT projects;
- Stronger link of cohesion financing with the Europe 2020 objectives;
- New category of ‘transition regions’;
- New conditionality provisions;
- Partnership contracts with each Member State to ensure mutual reinforcement of national and EU funding;
- An integrated programme of €15.2 billion for education, training and youth, with a clear focus on developing skills and mobility;
- A common EU strategy called “Horizon 2020” for investment in research and innovation worth 80 billion €;
- 30% of direct support to farmers will be conditional on “greening” their businesses;
- €4.1 billion for the fight against crime and terrorism and €3.4 billion for migration and asylum policies.
- New own resources for financing the budget- a financial transaction tax (Tobin tax) and a new modernized VAT;
- Simplification of the existing correction mechanisms.
You can also read the critical assessment of the proposal by Charlemagne. Real Time Brussels looks at the fierce political battles that will likely emerge in the process of adoption of the Multiannual Financial Framework.
Posted in Agriculture and Fisheries, Budget and Finance, Education, Science and Culture, Energy, Enterprise, Environment, Foreign and Security Policy, Institutional Affairs, Justice and Internal Affairs, Regional Policy, Taxes and Duties, Transport
Tagged 2014-2020, cohesion, EU funds, Europe 2020, European Commission, European Union, infrastructure, management and control, Multiannual Financial Framework, own resources, Tobin Tax
The Commission has put forward an important proposal for the reformation of the so-called Generalised System of Preferences (GSP) which grants specific tariff preferences to developing countries in the form of reduced or zero tariff rates or quotas.
Key elements of the proposal include:
1. Concentrating GSP preferences on fewer countries. A number of countries would no longer be eligible to benefit, including:
- Countries which have achieved a high or upper middle income per capita, according to the internationally accepted World Bank classification (such as Kuwait, Russia, Saudi Arabia and Qatar).
- Countries that have preferential access to the EU which is at least as good as under GSP – for example, under a Free Trade Agreement or a special autonomous trade regime.
- A number of overseas countries and territories which have an alternative market access arrangement for developed markets.
2. Reinforcing the incentives for the respect of core human and labour rights, environmental and good governance standards through trade by facilitating access to the GSP+ scheme which grants additional, mostly duty-free preference to vulnerable countries.
3. Strengthen the effectiveness of the trade concessions for Least Developed Countries (LDCs) through the “Everything but Arms” (EBA) scheme.
4. Increasing predictability, transparency and stability.
UPDATE: There is a good analysis by four economists in VOX on the impact of the proposed reform. They conclude that it is unlikely that the introduction of the Consolidated Corporate Tax Base would bring significant benefits to the EU in aggregate in terms of employment, GDP or efficiency.
The plans for a common consolidated corporate tax base are not new. However, the Commission has now stepped forward to formally propose the text of a new directive that should introduce a common corporate tax base in the EU. This is one of the measures recently identified in the Pact for the Euro.
The proposal will allow companies that have business activities in different Member States to consolidate their financial results, and to offset the profits in one country against the losses in another, and pay taxes on the net amount only. This is supposed to decrease compliance costs especially for SMEs. However, a recent report by Earnest&Young shows that there will be an average increase of 13% in compliance costs. The report also showed that the impact of the CCCTB apportionment factors was to move taxable profit into Member States with higher tax rates, thus increasing the total tax burden. Some Member States are also opposed to the idea. Unanimity is needed in the Council for adopting such legislation.
From 1 January 2011, traders are obliged to make an electronic declaration to Customs with security data on goods before they leave or enter the European Union. The type of security data requested from the traders varies according to the means of transport and the reliability of traders involved in the operation (see Annex 30a of Regulation (EEC) No 2454/93). It can include, for example, a description of the goods, information on the consignor or exporter, the route of the goods, and any potential hazards. The time limits for submitting advance security data also vary according to the means of transport: from 24 hours in advance of loading for maritime cargo to 1 hour before arrival for road traffic or even less for certain air transport.