Monday 29. November 2021
#161 - June 2013

 

Kairos for taxation vs. a setback for energy

Report on the 22 May European Summit

 

The European Summit of 22 May on taxation and energy lasted only a few hours. However it has provided a wonderful example of the glory and drama of today’s European Union: an unexpected breakthrough in the fight against tax fraud alongside the smallest possible step forward in the area of EU energy policy, even though both topics are supposed to be equally important.


For a European case-file to make real progress, it has to hit its opportune moment – its kairos, as they say in Greek. That moment occurred on 22 May in the fight against tax evasion and fraud. The growing need for tax revenue during a period of austerity (tax evasion figures quoted as high as €1 trillion) together with several spectacular cases of tax avoidance (like that of Uli Hoeness, president of Bayern Munich) and a changed international context following the revelations of Offshore Leaks were enough to turn the tide.

 

Giving their full approval to the recommendations made by their Finance Ministers, the Heads of State and Government have reached agreement on adopting, until the end of 2013, a revised version of the Directive on taxation of savings income which will cover not only interest income but also other types of financial income.  Before this date, the EU will also conduct negotiations with five neighbouring countries, including Switzerland, with a view to their applying equivalent measures.

 

Additionally, the system of automatic exchange of information [on savings income] will become mandatory, agreed even by Austria and Luxembourg which have both been applying until now a 35% withholding tax to be repaid to the saver’s country of origin. These new measures will come into force at the start of 2015. Other decisions taken on 22 May concern: tighter controls on practices of ‘fiscal optimisation’ by major groups; a firm commitment on the part of the EU to improve transparency rules for identifying the real beneficiaries behind shell companies, trusts and foundations; and a stricter monitoring of the digital economy in terms of taxation.

 

The results of discussions on energy, the Summit’s second theme, were underwhelming, to say the least. The European Council did nothing more than restate the previously fixed objectives:  completion of the internal energy market by 2014 and the development of interconnections by the end of 2015 so as to put an end to the isolation of any Member State from the European gas and electricity networks. Promises were also made to expand renewable energies and improve energy efficiency.

 

To tell the truth, European energy policy has stalled, even though nowadays it figures in the European treaties. Commentators such as Joachim Bitterlich of the Robert Schuman Foundation are even talking about a “renationalisation”, taking their text from certain important unilateral decisions made by Member States in the field of energy policy.  On this point the Conclusions of the recent Summit clearly state that, from now on, “Member States will regularly exchange information on major national energy decisions,” but the text also reveals the retention of the sacrosanct principle of “fully respecting national choices of energy mix”.  The same national autonomy holds sway in relations with third-countries that supply oil and gas. It is hard to see any plans being made to hold even one consultation round with the partners with whom the decisions had been made to create a large common market and – for some of them – even a common currency.

 

So it was not enough, then, that at the start of his second mandate Herman Van Rompuy, President of the European Council, had inserted energy as one of the themes in the Indicative Programme. It matters little that he has scrupulously followed the planned timetable.  As far as energy policy is concerned, the date of 22 May will be remembered and not only for the change in direction. Instead of emphasising the implications of energy policy for the fight against climate change, the recent Summit listened to the alarms sounded over the loss of European competitiveness compared with the rest of the world because of its high energy prices. In 2011 the average price of commercial electricity in Europe was $1744 per TOE (tonne of oil equivalent) against $809 in the United States.

 

But there is one thing that does not change, and it popped up once again at the recent Summit: European policy does not operate by logically following a timetable. What governs European policy is kairos.

Stefan Lunte

COMECE

 

 

Translated from the original text in French

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