‘Tax race to the bottom’ between Member States
WRITTEN QUESTION E-1035/10
by Michail Tremopoulos (Verts/ALE)
to the Commission
The European Treaties provide that fiscal policy is, in principle, the responsibility of national governments.
The existence of the single market and the free movement of capital within the EU has encouraged a form of ‘tax competition’ between most Member States, which discourages not only the taxation of income, but also of property or environmental pollution.
OECD data show that tax competition affects almost all European countries, and this is having an obvious impact on public revenue and the social distribution of tax burdens.
These data show that those Member States now facing the gravest public finance deficits had carried out swingeing reductions in tax rates between 1993 and 2009, thereby depriving themselves of a significant volume of public revenue.
In particular, the highest tax rates were reduced during the period in question by 30 % in Greece, 68.75 % in Ireland, 14.3 % in Spain and 33.1 % in Portugal.
In view of the above, will the Commission say:
- 1.Does it share the view that encouraging ‘tax competition’ between national governments as part of the single market is contributing to a further worsening of public deficits among the most vulnerable Member States?
- 2.Does it intend, as part of efforts to seek policies to find a way out of the crisis, to consult national governments to plan measures which will contribute to stopping ‘tax competition’?
-  http://www.vimaideon.gr//Article.aspx?d=20091101&nid=13974140&sn=%CE%9A%CE%A5%CE%A1%CE%99%CE%9F%20%CE%A4%CE%95%CE%A5%CE%A7%CE%9F%CE%A3&spid=1478
OJ C 138 E, 07/05/2011