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Procedure : 2010/2102(INI)
Document stages in plenary
Document selected : A7-0027/2011

Texts tabled :

A7-0027/2011

Debates :

PV 07/03/2011 - 25
CRE 07/03/2011 - 25

Votes :

PV 08/03/2011 - 9.8
Explanations of votes
Explanations of votes

Texts adopted :

P7_TA(2011)0082

Debates
Monday, 7 March 2011 - Strasbourg OJ edition

25. Cooperating with developing countries on promoting good governance in tax matters (short presentation)
Video of the speeches
PV
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  President. – The next item is the report by Mrs Joly, on behalf of the Committee on Development, on Tax and development – Cooperating with developing countries on promoting good governance in tax matters (2010/2101(INI)) (A7-0027/2011).

 
  
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  Eva Joly, rapporteur.(FR) Mr President, Commissioner, ladies and gentlemen, it is with some satisfaction that I present this report on tax and development to you tonight.

It represents an important stage in a battle that began a long time ago, which I am now pursuing in the European Parliament. I would like to thank my colleagues in the Committee on Development, with whom the work has been extremely productive. I hope that it will find confirmation during tomorrow’s votes.

Developing countries have been very badly hit by the financial and economic crisis and the rising prices of agricultural materials and now need substantial new sources of funding more than ever. Amid this context of global crisis, tax revenue, which is the oldest source of development funding, is a major issue and a genuine challenge.

Effective taxation systems not only provide funding for vital public services. By promoting the transparent, responsible use of government revenue, they are also one of the foundations of a responsible democracy. Contributing towards raising equitable, progressive and transparent taxes should in no way lead to removing or reducing official development assistance (ODA). It should not provide a further excuse for Member States that are increasingly inclined to reduce their share of GDP which is devoted to ODA.

Whilst ODA may be imperfect and have much room for improvement, it is no less vital for countries that have been severely affected by both economic and climate-related crises. It is not a question of replacing aid, therefore, but of redirecting it towards developing effective taxation systems, to which the multinationals must contribute on the basis of their actual profits. In this way, poor countries will be able to take ownership of their development once again, reduce poverty and compensate for the loss of customs revenue caused by the liberalisation of the markets, so that in the long term, they will be able to manage without foreign aid.

However, the countries of the South are not only victims of their own ineffective taxation systems. They are also victims of the tax dumping imposed by the Bretton Woods bodies, of the cost of illicit capital flight, and of tax havens. Every year, they sustain colossal losses of tax revenue estimated at over ten times the amount of aid they receive from rich countries.

This report emphasises this fact. As for the OECD guidelines, far from being adequate, they actually pose a threat. By allowing non-cooperative jurisdictions to be taken off the grey lists simply by signing cooperation agreements without imposing any automatic exchange of information, they are creating the illusion that tax havens are legitimate and conferring credibility on a system that is harmful to public finances in North and South alike.

Putting an end to tax havens is a vital step towards these countries’ development, and the European Union must make it an absolute priority. The EU must shoulder its responsibilities as the United States has done and produce clear, binding legislation coupled with genuine sanction mechanisms in order to put an end to tax havens, which are like weapons of mass destruction for the development of poor countries. The EU must prevent profit and transfer price manipulation by companies, especially European companies, which both benefit from and abuse detrimental taxation systems. It must impose the introduction of a transparent, binding international mechanism that will place a duty on all multinational companies, especially those in the extractive industries, to automatically declare the profits they make and the taxes they pay in each of the countries in which they operate.

This is a vital first step towards stopping those who are getting rich on the back of the Southern countries’ misery. It is also a vital step towards restoring the European Union’s credibility.

 
  
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  Elena Băsescu (PPE).(RO) Mr President, against the background of the current economic crisis, promoting good governance on tax matters is a necessity at both EU level and outside it. I should point out that every state is responsible for deciding its own fiscal policy. In this context, the practice of putting up obstacles must be avoided and cooperation between countries encouraged.

Combating tax havens is a key priority. They help detract from the quality of the political system in developing countries. They also encourage economic crime, making it more profitable. This in turn helps increase the inequitable distribution of tax revenues. Another measure involves increasing the exchange of information between all Member States. At the same time, there needs to be a greater level of participation from developing countries in the relevant international forums.

 
  
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  Franziska Keller (Verts/ALE). – Mr President, tax and taxing is an extremely important topic when we talk about development policies. It is a crucial topic for policy coherence for development because, without a proper tax system, without proper policies on tax havens, we will never be coherent in our development policies and, at the moment, we are not. Therefore, I very much welcome this report and I hope that tomorrow, you, the Members of this House, will not water it down.

We need to complement the Commission communication, which has serious shortcomings, for example, by not addressing problems within the OECD and by not addressing the impact of tax competition on tax revenues. If we want to comply with the Lisbon Treaty, if we want our development policies to be coherent, we need to take action now and I ask you to support this report in full.

 
  
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  João Ferreira (GUE/NGL).(PT) Mr President, while cooperation in the field of tax is important and necessary, we should not ignore the fact that tax policy is a crucial instrument of economic and social policy, on whose definition obvious political criteria and evaluations have an impact. Therefore, it does not fall to the European Union to export so-called ‘good governance in tax matters’, as the rapporteur quite rightly mentions. Developing countries’ sovereignty, choices and options must be entirely respected, whilst paying attention to their specific situation and conditions.

I have two observations about two hot topics. Firstly, the so-called Economic Partnership Agreements, which we have been imposing on developing countries despite their resistance, and which severely constrain these countries’ tax systems, along with causing other severe damage. Secondly, tax havens, which continue to exist and lead to losses of revenue equivalent to USD 800 billion every year according to the report. These two examples are paradigms of the inconsistency of the European Union’s policies regarding its stated development cooperation objectives.

 
  
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  Maria Damanaki, Member of the Commission. – Mr President, on behalf of the Commission, I would like to thank the European Parliament, and especially the Committee on Development, for this report.

I am pleased to see that Mrs Eva Joly’s report highlights, and gives added strength to, the message of the Commission’s communication on tax and development. It also sets very ambitious targets and provides powerful guidance for the European Union to strengthen revenue mobilisation in developing countries. Domestic resource mobilisation is central for sustainable growth, poverty reduction, good governance and the provision of public goods needed to achieve the Millennium Development Goals. We need to improve synergies between tax and development policies and assist developing countries in building better tax systems and administrations.

We face a serious problem. I was personally impressed by your figures stating that the amount of illicit outflows is about ten times the amount of aid money going into developing countries. This is really striking.

So we must work simultaneously at two complementary levels. First, we need to support effective domestic tax systems and, secondly, we need to work towards a transparent, cooperative and fair international tax environment to help developing countries fight against tax evasion and harmful tax competition.

Your report calls on the Commission firstly to take better account of the impact of trade liberalisation and, secondly, not to be limited to the OECD principles in the fight against tax evasion and harmful tax competition. I would like to refer to these challenges.

Concerning the first matter, I can assure you that we are fully committed to supporting successful fiscal transition through increased support for capacity building, demand-driven regional and international capacity development initiatives, and better donor coordination at EU and international levels.

Concerning the second matter, the Commission considers tax evasion and harmful tax competition as major obstacles to domestic resource mobilisation. Therefore, we are helping developing countries to develop capacities to address these challenges and also promoting better international cooperation in tax matters.

A lot of work has already been undertaken since the adoption of our Communication. Concrete action has been made possible by the Parliament’s financial support. Your 2010 allocation of EUR 708 000 has allowed us to fund a series of important activities in order to promote tax governance. These activities include technical seminars of the African Tax Administration Forum, support to the extractive industries, transparency initiatives and the financing of a side event at the United Nations on domestic resource mobilisation. We will also provide technical assistance to implement tax information exchange agreements.

Moreover, the Commission is preparing a Communication to assess the feasibility of introducing a country-by-country reporting requirement into EU legislation. We had a public consultation, which ended last January, and now we will continue with an impact assessment on this important issue. This could help developing countries to combat tax evasion more effectively.

I sincerely want to thank Parliament for your support and your commitment on these issues. I am convinced that much progress can be made to strengthen tax governance and I am glad to see that these topics have also been included in the agendas of the G20 and the G8.

 
  
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  President. – The debate is closed.

The vote will take place at midday on Tuesday, 8 March.

 
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