June 3, 2020 / 1:59 PM / 2 months ago

European lobbyists off the starting blocks in new tax race

BRUSSELS (Reuters) - The European Union’s pitch for more taxes to repay coronavirus stimulus spending made corporate hackles raise, with lobbyists saying that new burdens would risk undercutting economic recovery from the pandemic.

The EU’s executive proposed new taxes to repay an unprecedented 750 billion euros of debt it would raise to channel the money to the 27 member states to help kickstart their battered economies.

The possible new levies - if agreed at all - could include a digital tax, a levy on carbon footprint of EU imports, a single market fee for large corporates, more proceeds from CO2 emissions from the aviation and maritime industries, as well as a fee on not-recycled plastic waste.

“We warn against new taxes for companies; these would be counterproductive and are damaging to Europe as an industrial location,” said Thilo Brodtmann at Mechanical Engineering Industry Associaton VDMA, which represents around 3,300 firms in Germany and Europe, including Thyssenkrupp and Siemens.

Some, if not all of the mulled taxes could make the eventual mix, which would not take effect before 2024 at the earliest. While much detail is still missing, lobby groups are already pushing back.

“We reject new taxes and levies on an EU level, such as digital and plastics taxes or additional levies on CO2. Burdening citizens and companies goes against Europe’s economic recovery,” said Joachim Lang, director general of the Federation of German Industries BDI.

The Commission’s plan marks a fresh start in a debate that has already seen some ideas previously fail to win the unanimous support of EU governments.

Frustrated, some countries decided to go alone. France, the Czech Republic, Italy, Spain and several others have either already introduced a digital tax or announced plans to do so.

“That has been in the air for a while,” said a tech lobbyist in Brussels. “Where we would still need to engage is to push for a harmonized rate of any tax across Europe - for now it’s too disjointed.”

For now, differences of opinion persist even within the Commission, which said harvesting some 0.2% of the turnover of the largest global firms that earn on the EU market could yield 10 billion euros a year.

While Brussels’ top budget official, Johannes Hahn, has said it could affect 70,000 companies in Europe with global turnover exceeding 750 million euros, his peer responsible for the single market, Thierry Breton, has urged caution on the matter.

National Association of German Cooperative Banks (BVR) said the Commission’s debt should be repaid through savings elsewhere in the EU budget or with higher contributions from member states to their joint coffers.

“Under no circumstances should European solidarity in dealing with the corona crisis lead to Europe-wide and permanent additional tax burdens,” it said.

Significantly deeper fiscal integration would also mark a step towards a more federalist EU, a notion that some members reject.

Additional reporting by Hans Seidenstucker and Christoph Steitz, Writing by Gabriela Baczynska

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