EU announces common corporate tax plan The European Commission has announced plans to overhaul corporate tax across the single market, including the introduction of a common consolidated corporate tax base (CCCTB). A CCCTB would make it easier and cheaper to do business in the EU, and act as a "powerful tool against tax avoidance", the Commission said. The …
But this will inevitably mean that smaller countries such as Ireland and Luxembourg will miss out compared to larger economies such as France and Germany
So what? It's about time. Tax havens had it way too nice over the years.
Wealth is created in one place, people work hard to create it, then spend their money, and instead of returning to circulation in the place where it was spent, it goes to a different country that just happens to have cozy corporate deals in place? All without having to participate in costs and risk of creating and accumulating wealth?
I don't think this will pass. How does this benefit Jean-Claude van Wanker of Luxembourg? I mean, he's got a very nice gig allowing businesses to relocate their corporate HQ's to Luxembourg in return for whatever they want to "donate" to them. I think he should block it. That is, as major EU participant with the Presidency of the EU Commission and a population smaller than ..... Leeds. That's democracy, EU style.
Your argument falls down because no one wants it to be where it is created.
Apple reports profits in China, the Chinese workers benefit from more money working its way into their social system.... yeahhhh right...
Quite a bit of these tax loopholes have been pushed through in part because the gov's passing the laws felt that one day that bit of Pie would come back to their table. We now assign more "Value" to things that have little value, but view our workers as nothing more than an expense.
If you dig into it a bit more, Wealth is a bit like energy, it can never be "created" or "destroyed"... It is simply transmitted or transformed. We have spent the past few thousand years moving "wealth" around the world. Someone out there will not win, to grow wealth in the USA, somewhere else in the world MUST be deprived. The only way we "Create" "Wealth" is by reassigning something else to have a value. For example, 40 years ago a rounded corner was, well, a rounded corner. Today a "Rounded Corner" is an asset that you need to pay someone else to use if specific conditions are met. Nothing has been "Created", we have just "Monetized" it.
So who do we pay... The workers who make the products, the people who monetized the ideas, or the people who sell the product that was made by someone else, and monetized by yet someone else. In truth, "Tax" havens are only broken because big business can get a "Holiday" when they bring the money back. There is currently about 2.5 trillion dollars (from about the top 40 firms that offshore) that could be brought back now... Those firms are all pushing for a tax "Holiday" again (the last one in the USA was, I think, in 2004 under the Homeland Investment Act.
So before you think that "Ireland" is out there sticking it to large areas... Think about the USA that charged only a 5.25% tax rate in 2004 for those large multinationals to bring their money home.
I am sorry to tell you, but this is economically illiterate. Wealth _can_ be created, otherwise we would still be hunter-gatherers. And it can certainly be destroyed, most wars and a lot of revolutions do that very efficiently.
I suggest you start with Adam Smith, his insights are still largely valid (including the observation of the tendency to price fixing), if much abused.
Carney created £85 billion in the few months since brexit vote. The problem is it goes to the banks who use it to rebuild balance sheets and ultimately ends up in assets like property or stocks that only benefits the very few and not the many. Wealth can most definitively be created out of nothing - it's distribution is a separate discussion.
sounds like it's a Brexit benefit for both the EU and the UK.
Well, its a start on a single set of tax regulations set in Brussels - and by using "regulations" Brussels can actually set these as law, without the individual nations having any say on the detail (and fair enough, those people in the EU presumably want to see this). This has two important components - the French and Germans have always hated Ireland's tax arrangements, and the Apple case was only ever going to have one important outcome, and that was centralisation of taxation powers in Brussels. This will certainly end badly for Ireland if it goes ahead.
The second important element (and probably the one uppermost in the minds of the Eurocrats) will be that the rules will be carefully drafted to try and stop the UK being able to offer lower tax benefits to companies based here and doing business in the EU. In reality, this won't cause UK based corporates to relocate - it will just increase the cost of products sold in the EU - and as bunch of ageing economies with circled wagons, the EU don't mind at all if the little people see their costs go up.
The EU officialdom preside over a collection of disjointed, sclerotic economies with eye watering unemployment, high taxes, and permanently locked in internal exchange rate imbalances. They now think that they can decide to (in effect) raise tax rates, and undertake more of the deeply unsuccessful centralisation that has so far yielded no benefits other than a customs union (which the original EEC could have offered without half the pain). To be fair, the customs union element was a major achievement - but then the self important fuckers sacrificed all of that on the alter of politcal and financial integration and control.
Where do you get shit like that from.
Exactly. My is that this would require majority consent from the EU parliament, which is comprised of representatives of all the EU nations.
You know, I think we have a word for this. What was it again? Oh yes, 'democracy'.
Typical ukip/brexit buffoonery the unpallatable truth to many EU deniers is that indeed the european parliament is democratic probably more so than the UK government. To influence democratic process one actually has to take part, vote for a credible MEP with a mandate to do more than simply filibuster and be a contrarian. Instead we got these sad xenophobic embarrassments like Farage (obviously the best way to negociate decent trade terms!)
The proper word(s) might be "representative democracy," in which representatives are elected by largely democratic procedures and then rule by majority (or sometimes supermajority) consent of the representatives, who can do pretty much what they want, subject only to the remote possibility of recall (in some arrangements) or removal at the next election.
That is quite different from democracy in the old sense, where the demos is consulted directly. Perhaps the difference is less important in the EU than in the US, where a rather large fraction of the population expresses belief that their legislative representatives actually are on the payroll of various corporations or rich benefactors.
Hold on Ledswinger, this is what you wrote not that long ago. 13 Sep 2016
"As usual. Big fat bastard corporation doesn't really want to pay UK salaries much of the time, or any UK taxes that it can avoid. But wants access to UK courts and legal system, privileged lobbying access to our government, and to have ready access to such UK research as it chooses to conduct here.
Hypocrites.".
What makes you so upset when the EU tries to do something about the tax avoidance.
What makes you so upset when the EU tries to do something about the tax avoidance.
Where am I upset in the comment in this thread? I made a number of observations about the rational and impact of these proposed changes. I even observed for that remaining EU nations, presumably they will be in favour of such a centralisation of fiscal powers.
Far from being upset, I'm delighted that the EU takes this next step forward on the journey to a single nation state of Europe - common currency, centrally set fiscal policy, no internal borders, common foreign policy, its own military, centrally set environmental standards, a single energy market etc.
And I'm even more delighted that that UK won't be part of it.
And I'm equally delighted that I will be part of it, thanks to my grandmother's having had the foresight to be born in Belfast, earning me an Irish passport, and my having the foresight to sell my house in London at an outrageous price, sell the proceeds for Euros and move to Spain before the referendum.
If handing over control of their (corporate, for now) tax policy to the EU Commission is something that the remaining EU members want, then it sounds like it's a Brexit benefit for both the EU and the UK.
Oddly enough the UK and Germany often voted together. Germany might end up outnumbered by the more bureaucratic states when the UK leaves. Or even before as the UK seems to be sitting on its hands now so it doesn't offend anyone.
Must be working through the pile of things uk blocked right now.
I bet you it wasn't just the UK that blocked this one last time. So it still might get blocked.
But there are certainly a bunch of things we didn't want where the EU went ahead without us. The two biggest being Schengen and the Euro. How are they turning out?
Well, Schengen is currently in the process of breaking down - the Commission just had to decide not to sanction a bunch of countries for using "temporary emergency" border controls for over a year so far for example.
And the Euro has turned out to have been one of the greatest fuck-ups in modern economic history. Italy's economy is smaller than it was when the Euro began - their manufacturing sector is now smaller than it was in 1992. Greece has suffered a longer and deeper recession than either Germany or the US did in the Great Depression - and Greek unemployment is predicted by the IMF to finally drop below 10% by 2040! The whole Euro area is flirting with deflation, unable to politically resolve these difficulties, the economy is still smaller than when the recession hit in 2008 and the banking system is in a horrible mess, and there's no political solution in sight.
Perhaps they should have listened to us a bit more...
To balance things a little, the Italian economy is generally accepted to have been a pile of lies for rather too long and moving to a marginally more accountable system is beginning to expose the institutional accounting shenanigans that exists from "commune" level and up. The Greek economy was a masterpiece of creative accounting and has been for rather a long while and how and why their self certified figures were accepted would make an interesting story.
Disclaimer: I don't live in either of these places, but I know people who do/did and their tales are quite interesting...
I think that's a bit unfair on Italy. Clearly totally true about Greece...
The Italians joined the Euro partly in order to try and impose some discipline on themselves - and avoid the inflation and periodic devaluations they've used to run their economy since WWII. And to quite a large extend they did that successfully. Italy has not splurged massive amounts of government spending since the Euro came in, their households hold large assets (admittedly often in Swiss accounts safe from the tax man) and only their corporate sector had a bit of an issue with debt. But not a serious one. The Italian banking system was a damn site better run than the UK, German or French one (actually so was the Greek) - their problems have been caused by the stupidity of the ECB refusing to act as a lender of last resort (the main point of a central bank), and the fact that their economies are so screwed that they've got lots of bad debts, and with low growth and negative inflation the debts actually get bigger, not smaller. Also Italy didn't bail out it's banks, like Germany did in 2008 - when the Eurozone rules allowed sensible bail-ins, and the Eurozone's new banking regs were written by fuckwits - who hadn't worked out that Italian and Spanish customers by junior bank debt as a retail investment product - so bailing in junior debt makes bank recapitalisation politically impossible and economically suicidal.
Basically the Euro is shit, and Italy was in at too high a rate. Made much worse by Germany's treaty-breaking Hartz IV reforms which reduced wages (effectively an internal devaluation) to competitively advangate German exports against the rest of the Eurozone. In a proper economy, exchange rates would take the shock.
Remember two other things. Italy may have had some dodgy official figures (Greece much more so) but they don't control the foreign exchange markets, most of that is in London. So the current account position can be independently calculated - plus the stock of government debt is known. This is why Greece's figures were suspect in the market before it all came out, it's just nobody cared to do anything about it. Secondly Italy grew to be the 6th largest economy in the world by the 1990s - so even with their policy of over-spending, generating inflation and being forced to regularly devalue they were still running their economy OK, or at least growing it.
IMHO, the EU can't continue in today's halfway state in the long run. In order to solve problems like the Greek debt, they need to be unified from a fiscal policy and taxation perspective. That will mean more successful countries like Germany subsidizing less successful ones like Greece, just like NY and California subsidize states like Alabama and Mississippi in the US.
Just like the US has a single fiscal policy covering the nation (i.e. interest rates etc.) but split taxation (federal states and state taxes, but with states not maintaining long term debt like the federal government) so will the EU. If they do not do this, the imbalances causing problems in countries like Greece will eventually force them to leave the EU and the whole thing will fall apart.
While the UK was only halfway in as it was, they would be against such close integration of the rest of the EU, so maybe Brexit will be good for the EU by removing roadblocks to this future.
What you describe is indeed necessary for a successful currency. But the political reality is that Germans will simply not vote to subsidise feckless Greeks (as they - I think wrongly - see it).
The person who has probably the best claim to be called the 'architect' of the euro - Otmar Issing - is now of the view that it will inevitably collapse. You can read the gory technical details here:
Interesting how the countries who were the most economical with the truth regarding their economies are the ones suffering the most by being part of the Euro. One wonders why they so desperately wanted to be part of it in the first place. Maybe they were about to tank anyway and saw the Euro as an out. Sadly they were mistaken.
Practically a Swiss Colony. Lichtenstein are not in EU, they are under same rules as Switzerland who manage their telecoms and much other stuff. Nearly as close to Switzerland as I.O.M. or Channel Is. is to UK (neither is exactly part of UK, but not a colony like Gibraltar or Falklands)
Well part of the corporation tax problem is the single market. Also the VAT problem. The point of the single market is that a company in one country should be able to trade in another, but using its normal domestic legal regime.
So that encouraged countries to game the tax rates in order to attract more corporate HQs.
In principle, Brexit (assuming we also leave the single market) would fix that problem. However, corporation tax avoidance is also something large corporations, with large profits to pay lawyers and accountants, are always going to do.
I don't think corporation tax stealing works so well for large economies. By lowering the rates to attract a few more HQs in, you lose money from your exisiting companies. But if you're a small market like Ireland, with foreign trade making up a huge proportion of your economy, it's worth doing.
Hmm... Tax is not an EU competency, therefore they have no business making rules here.
Yet again the federalists want to stretch their powers into new areas. Glad we're (soon) out.
P.S. Corporations don't pay tax. The tax incidence will fall on the shareholders (our pensions) & employees (us).
When they have done this, what are the odds they then want to keep raising taxes so they have more for their pet projects?
> When they have done this, what are the odds they then want to keep raising taxes so they have more for their pet projects?
A heavy-handed federal government that keeps raising taxes, while member states do the same.... sounds like the good old EUSA. There's your answer.
EU should better care about their VAT scams made legally possible, where tax-payers money is simply being stolen through VAT re-payments, according to some reports, up to 300 Bn loss annually. Historic VAT legislation in EU with its monthly or even longer VAT tax reporting periods is so hopelessly outdated, that in some countries up to 30% of VAT tax money is simply stolen, using multi-country rings of fake deals by maveric businesses, who take advantage of modern cross-border electronic transactions that are 100x faster than legacy VAT tax reporting legal requirements. European VAT legal system was designed for unwired paperwork era of deal making. It is the biggest Europe's taxation system fail in the modern digital age. No surprise US companies outcompete European ones all the way to the bank and tax crimes are hardly possible with its dead-simple to administer federal sales tax system.
You're wrong about so many things? Here are a couple:
1) The US does not have a federal sales tax system. Which is why sales offers talk about adding X% if you live in Y, etc., and why a myriad legal cases are underway about whether a firm based in A can apply that state's sales tax when selling to a customer in B.
2) In the EU most VAT crime is domestic.
Not the ones who voted, just the ones who lead the campaigns, like Boris, who was born into wealth and land ownership, and Nigel, who is a rich ex-banker. About as 'man of the people' as you can not get.
What I can't understand is why anyone was fooled into thinking these arses represent anyone's interests other than their own.
Maybe they looked at the people on the other side of the debate?
People like the London School of Economics? The Royal Society? Trade Union leaders? Universities? Business organisations?
Enough of this 'debate' bullshit. People were clearly influenced by the biased coverage of minority interests dressed up as their own by the right-wing media. In the real world, away from the Daily Mail, Telegraph, Times and Sun, everyone who actually had an opinion was voicing it along the lines of 'Brexit will be a bad thing'. It's a pretty obvious example of those who shout the loudest being the ones you should listen to the least.
@ Loyal Commenter
"People like the London School of Economics? The Royal Society? Trade Union leaders? Universities? Business organisations?"
Cameron, Osborne, IMF, Carney (former BoE King was all for it), Obama, EU all spouting proven bull. Both official campaigns existed entirely on bull. Neither side did us proud.
"Enough of this 'debate' bullshit. People were clearly influenced by the biased coverage of minority interests dressed up as their own by the right-wing media."
And left wing bias too. Amusingly the split didnt seem to be left vs right as people from both sides were on opposite sides of the debate. And why not? The EU was a legitimate concern and broken and people on both sides from any point on the political spectrum were saying this (and debating fixing from the inside or getting out before it sinks).
"everyone who actually had an opinion was voicing it along the lines of 'Brexit will be a bad thing'"
Well that was the loudest voices but also discredited and so as you say were not listened to. This is why the shambles fell apart. There was nothing good advertised about the EU it was all WW3, become irrelevant, nobody will trade with you, fall of western civilisation, punishment budget if you vote wrong, etc. And the leave side was just as bad.
The fooling is universal, it isn't just in the UK with the people behind Brexit. Trump has somehow convinced a lot of angry lower middle class white men that he's a self-made defender of the people, when he's about as far from either as it is possible to be.
"Trump has somehow convinced ..."
Maybe. But it is useful, and probably necessary, to remember that they already were angry (as were quite a few others than this year's chosen targets of ridicule and disparagement. Trump did not make the sad situation into which he stepped, but was chosen because he articulated what they already were thinking. His off-the-wall and often ill-considered statements resonated with enough Republican primary voters to gain him the nomination over a number of candidates who were better qualified and more fit for the office, by far. And I fear that in the likely event that Clinton is elected, she probably cannot do anything, and almost certainly will do nothing, to resolve the underlying problems, so they will continue to fester for another four years or more.
For the record, I do not consider either one of them fit to hold any office of public trust and will not be voting for either of them. I have given up casting votes for lesser evils.
Well you're probably right that Clinton wouldn't do anything to solve the problems, but Trump certainly would not either. He's resonating with them because he's fooled them into thinking he understands their problems, and they don't realize that his solutions are juvenile and either impossible or unconstitutional, and wouldn't fix the issues even if they were implemented.
Telling them "I'll bring back the jobs" when there's no way to do that, sort of draconian changes that would cause many US multinationals to leave the country, sharply curtail foreign investment, and make things far worse, isn't a solution any more than Hillary's "we'll study the problems and implement concrete solutions to yadda yadda yadda". It just sounds better to angry voters who don't like reality and have chosen to believe Trump's fantasy.
I don't disagree with the premise that we need a political outsider to shake things up and try new ideas that neither party would consider due to entrenched interests, but a clueless demagogue like Trump is NOT that guy! Ideally we would have had a third party candidate come along this year - with such strong dislike of both Trump and Clinton, if any year was ripe for an independent challenger to win, this was it. Though maybe it can still happen in 2020, if Clinton wins this year. Assuming things just sort of muddle along so no one is particularly happy with her, democratic enthusiasm to re-elect Hillary would be pretty low and many would be ripe to consider an alternative. If Trump either wins the nomination again or runs as an independent and splits the republican Hillary-hater vote, there may be room for someone else to come along.
Quote :Seems the commission (selected by your democratically elected governments)
I think that sort of thing went out of fashion when those damned yankees revolted .....
The commision has powers EU wide, therefore it should be elected by the people it governs, not have people appointed to it by being best mates with whoever is charge of whatever member country
I don't know if you noticed but we get to vote for our MEPs. Other representatives are selected by the governments of the member countries of the EU so while we don't have any direct say on who they select we do have a direct say on who the selectors are. Well, we would if we had a rather more democratic society where it wasn't all about party politics and we didn't have to vote for the one that we least don't want in. Even with this we're in a marginally better situation than the US where it's pretty much an institutionalised binary choice of one nutjob or another and despite this Hollywood is still trying to persuade the rest of the world that the US is a democracy...
Having one EU corporate tax rate policy will make it easier for multi-nationals to find other, more tax friendly, places to "officially" earn their profits and do their banking. Those non-EU countries will no longer have to compete with Ireland and Belgium. One of the problems with the US is the government officials haven't figured out that having a high corporate income tax only means that very large corporations that manufacture their products in Asia and sell to customers all over the world have no problem "earning their profits" someplace else. US operations can be set up to just break even or only make a tiny profit for show.
If countries are competing to attract business, taking away the ability to set corporate tax policy is going to cripple those efforts. This is great for the UK. London has been a financial center for ages, there is a well educated population and a comparatively stable government. If the corporate tax rate were dropped to 12%, companies would climb over each other to relocate from other countries and the drop in corporate tax revenue would be offset by increased employment.
I would propose dropping income taxes altogether and simply taxing consumption. Taxation in the end taxes consumption since who really pays tax if it is not ultimately the consumer. However taxes are imposed it really falls at the same average rate on the consumer whether rich or poor. Taxing incomes is politically useful to promote various ideologies and gain power. Relieved of this burden, companies and entrepreneurs would flock to set up in the UK. Getting in first would be a profound advantage for UK prosperity.
Since VAT is a tax added to the selling price and taxation amounts to 40-45% of GDP, then an equivalent VAT would be about 80-90%. We really pay tax out of our take home pay, since employee income tax is included in the selling price of goods and services today.
When government and its employees spend the tax received; their purchases are tax free. This means that government can spend almost twice as much as the tax received making its gross expenditure on a par with the productive economy.
Income tax and all taxes on business are a great way to hide a huge consumption tax in retail prices. If consumption was taxed explicitly at the point of sale voters might see the cost of government and the welfare state in somewhat different light.
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