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Monday, 12 December 2005 - Strasbourg OJ edition

Corporate tax

  Gay Mitchell (PPE-DE). – Mr President, first of all let me say that it seems there is no more a case for harmonising corporate tax rates or bases than there is for harmonising property taxes, wealth taxes or capital gains tax. Firstly, a common consolidated tax base cuts across national sovereignty and subsidiarity. Secondly, the Commission maintains that it is not trying to harmonise tax rates, but how is it possible to separate the issue of tax base from the issue of tax rate? Would the harmonisation of the base not lead to a harmonisation of the rate?

Some colleagues may have confused harmonisation of the tax base with the harmonisation of company accounts and requirements for transparency between companies and their accounts. This is erroneous. Accounts can, of course, be harmonised, but harmonised accounts can then be adjusted for tax purposes in Member States and that is an issue for Member States.

Thirdly, the European Commission’s proposal for corporate tax harmonisation is based on the assumption that harmful tax competition results in a shift in taxation away from taxes on mobile capital and towards taxes on comparatively immobile labour and that this development is harmful for employment and ordinary EU citizens. This assumption is open to question in my view. Whilst there has been a downward trend in corporate tax rates in some Member States, this has been accompanied by both a widening of corporate tax bases and an improvement in the underlying company profitability. In my own country, for example, the lower tax rate has meant a multiplication of the tax take. We went up from EUR 385 million in 1996 to a EUR 5 707 million take in 2004.

Finally, let us not forget that the Lisbon Agenda is about making the EU the most competitive economy in the world by 2015. Paving the way for minimum tax rates or corporate tax plans will not prevent companies from looking outside the EU for more competitive rates.

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