Here are the taxes that the EU will place to repay the securities of the Recovery Fund
What the financial mechanisms of the European Recovery Fund hide. The in-depth study by Giuseppe Liturri
We don't know when the Recovery Fund money will arrive. We know with relative certainty when the taxes will arrive, which are an essential condition for receiving those sums.
We have been writing this since May 2020 : the Commission does not have its own resources to disburse the 312.5 billion subsidies of the Recovery and Resilience Facility (RRF) that the EU will distribute to the 27 Member States (with Italy and Spain in the lead with approximately 69 billion each). Indeed, the Treaties precisely prohibit it from arranging expenses not covered in advance by revenue and, only exceptionally, will it be allowed to get into debt by issuing bonds to disburse these subsidies. But that common debt, which has little or nothing to do with the longed-for Eurobonds, must be repaid and there can be no uncertainty about this, otherwise the triple A that the markets recognize to the EU could waver. We need certain and consistent income to face those repayments. Hence an intense propositional work by the Commission which began years ago but has now reached the point of definitive decisions.
As usual, we base our statements on the study of official documents, in particular a report published by the European Parliament Studies Service last February and the 14 pages of the Communication sent on May 18 by the Commission to the Council and to the European Parliament with the pompous title " corporate taxation for the twenty-first century ”.
Two instruments have been adopted to allow the EU to derogate from the prohibition on contracting debts. One to allow the issuance of the securities, the other to guarantee the cash flows for the redemption. The first is the commitment, valid until 2058, of all Member States to contribute to the common budget for an additional share equal to 0.6% of the Gross National Income (GNI). About 95 billion a year at 2018 prices (12 for Italy) that the Member States undertake to pay on first demand. The second serves to pre-establish certain revenues for the 30 years, starting from 2026, in which the Commission will have to repay the bonds issued in the previous five years to the markets. The regulation provides that these sums cannot exceed 7.5% of the 390 billion subsidies of the EU Next Generation annually. A ceiling of about 29 billion, which the Commission has taken precautions so as not to find itself having to repay too high sums in a few years, which speaks volumes about the prudence with which it is forced to move on this terrain.
But finding additional revenues of 29 billion (which is always around 20% of the EU's ordinary annual budget) is nevertheless challenging, especially in light of the effort the Commission has been making since 2011 to reform the overall EU revenue framework.
The goal is to reduce to a minimum, until they become residual, the revenues constituted by the contributions of the States paid in proportion to the GNI – which, together with the revenues based on VAT, accounted for 83% in the previous seven-year budget. total revenue – and introduce revenue directly attributable by the EU.
We lost count of the papers published by the Commission, just as we lost the memory of the results of 3 years of activity of the high-level working group chaired by Senator Mario Monti in charge of reforming the EU revenue system. On a subject for which unanimity is necessary, there has always been some Member State sideways.
But what until yesterday was a generic political commitment, from this year can no longer remain such. The European Parliament was clear: the capital and interest of the NGEU must be repaid with additional own resources for which it demanded and obtained, in the context of a decisive interinstitutional agreement concluded in December with the Council and the Commission, the definition of a precise table of march and related intermediate stages, in each of which will see the light of a new European tax.
There are six pillars on which the new revenues are based: with retroactive effect from 1 January 2021 (as soon as the ratification process of the Own Resources Decision is completed) a tax of € 0.80 / kg for non-recycled plastic. Subsequently, by next July, the Commission has already announced the proposal for the following hat trick: a mechanism aimed at penalizing the import of products with a high carbon "footprint" with a tax, a digital tax and an intervention on the trading in CO2 emission rights. All to be adopted by the Council by July 2022, for entry into force on January 1, 2023. To complete the work, by June 2024, the Commission will propose a tax on financial transactions and a tax calculated on a taxable basis common for companies. Adoption by the Council is scheduled for June 2025 and entry into force on January 1, 2026.
In doing so, the report of the European Parliament emphasizes, it would be difficult for the Member States to continue to make the usual calculation of credit and debit in financial relations with the EU. To be clear, what we have seen for some time now net contributors.
The communication from the Commission focuses precisely on corporate taxation, the last piece of the time schedule indicated. The project aims to identify a common tax base (today there are 27 different ones) for multinational companies to be allocated among the different States, according to a formula that takes into account different parameters (consumers, employees, fixed assets), which will then apply the respective national rates. All to ensure "fair and sustainable growth".
Yes, unfortunately here we go again, after 10 years of "expansive" austerity, they return to tell us that taxes bring growth. It won't get better.
(Updated and complete version of an article published in the newspaper La Verità)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-le-imposte-che-lue-piazzera-per-rimborsare-i-titoli-del-recovery-fund/ on Sun, 23 May 2021 06:53:39 +0000.