More than sixty years after its creation, the European Union remains an area in which fierce tax competition reigns among its member countries. Beyond the partial harmonization of VAT rules, the member states have never managed to initiate even a minimum tax convergence.
There is indeed a good reason for this. The level of mandatory levies—taxes plus social contributions—reflects the degree of socialization that each national democratic space deems appropriate. On the question of how and to what extent to tax the income and wealth of the wealthiest, at what age and with what money one can retire, how and for how long to compensate the unemployed, etc., the answers can legitimately differ according to societies.
One can dream of a Europe engaged in social convergence or taxing its rich in the same way. This would only be possible insofar as each of us would feel European first and be willing for our taxes to support the Greek unemployed or the Polish sick. But the “European society” does not exist.
Conversely, companies circulate their goods, services, and production sites almost without obstacle within the Union. In such an integrated economic space, it seems logical to measure and tax profits in the same way. But this is not the case. Apart from listed companies, which must follow international accounting standards adopted by Europe, for others, profits are not even measured in the same way. And for all companies, listed or not, they are taxed very differently from one country to another: the range is wide, from the 9% Hungarian rate to the more than 30% French rate.
Revenue theft. And this does not take into account the behavior of Ireland, Luxembourg, and the Netherlands, whose tax authorities allow multinationals, through various techniques, to avoid the taxes of their home countries. The LuxLeaks revealed profit tax rates of 1% to 3% in Luxembourg, an investigation by the European Commission showed that Apple benefited in Ireland from a tax rate on its European profits of 0.005%… We are no longer in tax competition but in revenue theft from supposedly partner countries, encouraging practices of artificial profit transfers. Both in terms of tax competition and the fight against tax havens, Europe as it currently operates is not the solution; it is the problem.
Christian Chavagneux, Alternatives économiques
