Oireachtas Joint and Select Committees
Thursday, 10 January 2013
Joint Oireachtas Committee on Finance, Public Expenditure and Reform
EU Taxation Policy: Discussion with EU Commissioner
I thank Mr. Algirdas Šemeta, European Commissioner with responsibility for taxation, customs union, anti-fraud, audit and statistics, for attending this meeting of the committee. He is accompanied by Mr. Valère Moutarlier, member of the Commissioner's Cabinet; Ms. Emer Traynor, spokesperson for the Commissioner; and Ms. Eimear Ní Bhroin of the European Commission representation in Dublin. All of the witnesses are very welcome.
The session will begin with an opening statement by Mr. Šemeta, followed by a question and answer session with members. I advise the witnesses that by virtue of section 17(2)(i) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. If, however, they are directed by the committee to cease giving evidence in regard to a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Delegates are further directed that only evidence connected with the subject matter of these proceedings is to be given. Finally, they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.
I understand the Commissioner has another appointment at 5.15 p.m., a time constraint I ask members to bear in mind. I now invite Mr. Šemeta to make his opening statement.
Mr. Algirdas ?emeta:
I thank the Chairman. Honourable members, ladies and gentlemen, it is a great pleasure to be here today. I thank members for the invitation to debate tax issues with them.
I wish to extend my best wishes in respect of the Irish Presidency of the EU. Like many of our European partners, I am of the view that this Presidency will provide a great opportunity to foster our European agenda and advance important issues for the EU. I also wish to congratulate Ireland on the important anniversary it celebrates this year, namely, its 40 years as an EU member state. Ireland has undergone a radical transformation since 1973, developing a modern, open economy that is driven by high-tech industry and global exports. It has been an example to many of the benefits that can be derived from EU membership. It might be easy to lose sight of this in the current difficult times. Even in hard times, however, Ireland has shown that working with its EU partners and implementing the necessary reforms can pay off. Although there is still a way to go, confidence is returning. Irish exports are strong and the forecast of a growth rate of 1.1% for Ireland this year is higher than that for the overall euro area.
Maintaining the stability of its currency and financial system, creating the conditions for sustainable growth and jobs and enabling younger generations to be more confident in the future are top priorities on the European agenda for 2013. I was happy to discover during our discussions with the Irish Government this morning that these are shared priorities. As members are aware, 2013 will be another challenging year. The Commission's economic forecast shows that the EU remains in a fragile economic situation and unemployment is expected to remain very high. Although the task is huge, the Commission is confident that Ireland has the will and capacity to lead the European family towards good progress and results during the first half of the year. In that context, I wish to say a few words on how tax policy can contribute to the EU's consolidation and growth agenda and on how Ireland can both benefit from and contribute to stronger tax co-ordination in the EU.
In recent years fiscal policies have primarily been driven by the need to bring public finances back to sustainable paths. Consolidation on the scale currently required cannot be achieved through spending cuts alone. As a result, many national reforms have resulted in tax increases. The primary role of taxation is undoubtedly to raise revenues. However, through the European semester the Commission has urged member states not to lose sight of the impact that tax policies also have on wider economic and social objectives. We have recommended that member states shape their tax reforms in the most growth-friendly manner possible - that is, away from labour and towards consumption, environmental or property taxes, which are known to be less harmful to growth - broaden their tax bases instead of increasing tax rates, thereby ensuring simplicity and neutrality of tax systems; reduce corporate tax bias towards debt-financing and tax schemes which increase the debt bias of households in order to avoid financial risks; and take
steps to improve the fight against fraud and evasion as a fair and efficient way to raise expected revenues.
For Ireland, the European Council's only recommendation in 2012 was to implement the measures laid down in the joint EU-IMF programme. The winter 2012 review of the economic adjustment programme clearly states that Ireland continues to make good progress, having met all of the quarterly fiscal targets so far under the programme. I am aware that - as has been the case with many other member states - the budget presented by the Government in December includes some significant tax measures designed to allow Ireland to meet the agreed budgetary objectives. Elements such as broadening the personal income tax base, reducing general tax expenditures, introducing a property tax and increasing excise duty are well in line with what the Commission recommends for quality tax reforms.
The approach we have taken with the European semester clearly leaves the main responsibility for tax reforms with member states. As long as they comply with EU law, they retain full sovereignty to adapt their tax systems and set their tax rates according to their own national needs. I assure members that there is no European threat to the tax sovereignty of any member state. However, with our extremely interconnected economies, working in isolation does not pay off. It undermines national reform efforts, creates tensions and loopholes between member states' systems and weakens the Single Market. I, therefore, strongly believe that progress on tax co-ordination at EU level is in the best interests of every member state. In that context, I wish to comment on how the Irish Presidency can be of assistance in ensuring progress on major tax matters on the European agenda.
Our European social model involves combining economic dynamism with social fairness. Taxation plays an important part in this model. Fairness lies in all member states being able to collect the taxes they are due and all taxpayers paying their legitimate share. Tax evasion and avoidance are clearly an attack on this principle. Not only do evasion and avoidance deprive member states of up to €1 trillion each year, they also mean that honest taxpayers shoulder a heavier burden in order to compensate for the evaders. With this in mind, in December I presented an ambitious action plan to combat tax evasion. This was accompanied by two recommendations to member states on how to treat tax havens and how to deal with aggressive tax planning. This package sends a strong signal to the world that the EU is serious about the fight against tax evasion. We can also highlight the need to work more closely together at international fora, notably the OECD, in order to combat this serious problem. I count on the Irish Presidency to ensure that these proposals will be endorsed by the Finance Ministers and that the issue will be properly debated in the context of the G8 and the G20. I also call on the Presidency to ensure rapid progress on the improvement of the saving tax directive, which is still facing opposition from two member states on the Council.
Fairness is also about each sector of the economy making an equitable contribution to public revenue. In this context, the financial transactions tax, FTT, is the epitome of fair taxation. Ireland, as much as any member state, has felt the effects of the financial sector's role in the current crisis. However, this sector carries a disproportionately lower tax burden than others. The FTT can redress the balance and ensure that the financial sector makes a fair contribution to public finances. Unanimity on the FTT could not be reached at EU level. Therefore, 11 member states have decided to move ahead together with a harmonised FTT. Although Ireland is not one of the 11 member states which signed up to the FTT, I am confident that it will facilitate progress during its Presidency. The European Council and our citizens have high expectations for quick results.
I will now deal with competitiveness. Improving the tax environment for businesses is central to EU competitiveness.
Investors need stability, legal certainty, a lower administrative burden and lower compliance costs. Eliminating unnecessary complexities and mismatches, which create tax obstacles for businesses in the Single Market, must be our focus. Already, we have made some progress. For example, cutting red tape and improving business cash flow is at the centre of our ongoing VAT reform. Certain important measures have already been delivered, such as new rules on electronic invoicing and cash accounting for small businesses. Other substantial improvements are in the pipeline and I am happy Ireland has made VAT one of its tax priorities for the Presidency. I would also like to see progress on the revision of the energy tax directive, which, if adopted, would avoid double taxation for businesses subject to the emissions trading system and encourage development of the green economy.
The common consolidated corporate tax base, CCCTB, is a crucial proposal for creating a business-friendly Single Market. Its fundamental objective is to make it cheaper and easier to do cross-border business in the European Union, be it by an SME seeking to expand or a multinational investor. The CCCTB has nothing to do with tax rates and Ireland has nothing to fear in this regard. Member states must remain free to set rates, and this flexibility allows a healthy degree of tax competition to be maintained. Bearing this in mind, I hope the Irish Presidency will help in pushing forward the CCCTB as a tool for greater EU competitiveness.
The European Union is currently working towards deepening the euro and forging a genuine economic and monetary union. Taxation cannot be avoided in this debate. Member states can, and must, retain their sovereignty on tax matters. This is essential for them to meet their specific national needs, but there must be recognition that the day of isolated tax policy is over. Coming closer together as a union on tax matters does not threaten member states' sovereignty; on the contrary, it reinforces their position at home to take the necessary measures for efficient growth-friendly and fair taxation. It helps our business and attracts investment by improving the Single Market and it strengthens our common position when addressing international challenges and spreading the principle of fair taxation abroad. I strongly believe, therefore, that for taxation, as for other policy areas, the answer to our current challenges lies in more Europe, not less. Let us move in that direction.
I thank the Commissioner. He is probably aware that the House of Commons in Britain recently carried out an extensive examination of international companies' tax obligations within the United Kingdom. What are his observations on this? Is the Commission considering what might be called life-cycle taxes based on a product's full carbon footprint, including in the manufacturing process? Products are made in Europe to high environmental standards while products entering the market from Asia and other areas are not of the same standard and do not last as long. The latter products are sold more cheaply in the European market. Has this been considered by the Commission?
Mr. Algirdas ?emeta:
We followed very carefully the discussion in the House of Commons. It was one reason for the production of the communication on how to fight tax fraud and evasion. It is not only a question of a communication but also of two very concrete recommendations on how to address issues. One is on tax havens. For the first time in the history of the Union, we have provided a definition of "tax haven", and we also proposed a blacklisting of tax havens. Blacklisting has consequences for the countries concerned. The second recommendation concerns aggressive tax planning. We proposed a general anti-abuse rule and also a renegotiation of double tax agreements between member states and third countries to reinforce the anti-abuse provisions in those agreements. We also proposed the governance structure for this, the so-called good tax governance platform. We intend not only to recommend but also to monitor the implementation of the recommendations.
Taken together, the two recommendations will, if implemented in member states, allow us to address issues discussed in the House of Commons. In the coming weeks, I will visit the United Kingdom to discuss this issue bilaterally. It is very important that EU member states co-ordinate efforts in respect of the OECD, which is currently preparing a proposal for a G20 meeting to take place in February in Russia. The work is ongoing. Addressing this issue is a strong priority for the Commission and me personally. We will push forward in that regard.
With regard to carbon taxes, we proposed an energy taxation directive which introduces the carbon dioxide element in the energy taxation system. The issue of border tax has been analysed. Our conclusion is that, at present at least, it would be too complex and burdensome for businesses if one tried to introduce a border-related measure. If there are any good ideas on this issue, we would be delighted to consider them.
I have four specific points, the first of which concerns the CCCTB. Since the proposals were published, the officials in the Irish Department of Finance and the Revenue Commissioners have been attending meetings of the working party on taxation, which is the forum for discussion on this issue. Can the Commissioner state whether the Irish officials have been opposing, supportive or neutral in their discussions and participation at the meetings?
My second point is on tax fraud and evasion. Are there countries in the Union that the Commissioner regards as tax havens? If so, what are they? Are there certain aspects of any country's tax policy that would make it a tax haven?
What is the position on tax exiles, be they citizens of Ireland or other member states, who move between countries such that they are not regarded as resident in any for the purpose of taxation? They may spend four months in Ireland, four months in another country and four months in yet another such that they do not spend the majority of their time in any one country.
How is the Commission dealing with ensuring these non-resident individuals pay their tax?
What protections are in place for those countries like Ireland which are opting out of the financial transaction tax, FTT? Harmful tax competition has been referred to and that a code of conduct group on business taxation is examining this. One of my concerns with the EU is that it examines taxation measures from an internal perspective. It is more concerned that Italy is not introducing tax measures that could disadvantage France or Ireland disadvantaging Spain. However, we are losing the world picture and not recognising that we need to attract global industry into the EU. It is so determined to ensure that no one member state has an advantage over any other that Europe ends up the net loser with jobs and investment ending up outside the EU.
Mr. Algirdas ?emeta:
Ireland has been constructive in discussions on specific technical points regarding a common consolidated corporate tax base, CCCTB, but did not express a position on the proposal as a whole. The Irish authorities have made good proposals on how to improve the technical side of the proposal. I hope during the Irish EU Presidency there will be a political debate at the ECOFIN Council about CCCTB. It has already between discussed fully by technical experts but now it is time to discuss it politically. I consider CCCTB as a pro-business tool. It will create a new tax system which will significantly reduce the administrative burden on businesses. At the same time, it could be a tool to deal with tax fraud and evasion by large multinationals. This issue can also be discussed at the ECOFIN Council.
Regarding tax evasion and EU tax havens, we have all the necessary instruments to identify harmful tax practices. The Deputy referred to the code of conduct on business taxation. This code is designed with the objective of eliminating and preventing harmful tax practices. If any member state believes another member state is engaged in harmful tax competition, it can apply to the code of conduct group and present its case which will have to be analysed and concluded on whether the practice is harmful or fair. We have everything in place in Europe in this regard. Member states do not use the full possibilities of the provisions of the code. With our communications we hope to create a new momentum in a more active use of the code.
In the communication of 6 December 2012, we proposed to expand the scope of activities of the code of conduct group to include the issue of wealthy individuals and tax exile. If the Council agrees to adopt the expansion of the code, this issue will be analysed specifically by the code of conduct group. We have to be careful because the powers of the EU in personal taxation are very limited. It has almost no powers in this area. It means we should use the code of conduct as a tool to address this problem.
Regarding safeguards for Ireland with the FTT, when we received the request from 11 member states to launch enhanced co-operation, we had to make an assessment of its impact on various matters such as non-participating member states. Our report is publicly available and concludes enhanced co-operation will not have a negative impact on non-participating member states. Enhanced co-operation is, by the way, an open procedure so Ireland can join at any time. Some other member states, including my own country Lithuania and the Netherlands are examining joining it. Everyone would welcome it if Ireland also joined.
What are the Commissioner's plans for tax fraud as up to €1 trillion is leaked through it? CCCTB has been around for many years. Where does the Commissioner see the process going in this? What timeframe does he see for CCCTB and FTT to come into practical effect?
Mr. Algirdas ?emeta:
I have to be clear that the Commission can solve all the problems with tax fraud and tax evasion. The majority of work in this area has to be done at the level of member states. We started to use the European semester and will intensify our efforts with concrete recommendations to member states on how they can improve their fight against tax fraud and evasion.
That is one issue.
Then we have European level and VAT fraud. On VAT fraud, only in July last we proposed the so-called "quick reaction mechanism" which would allow reaction quickly to new phenomena of fraud. Unfortunately, one or two member states continue to block this proposal which would allow member states to significantly improve the situation vis-à-visVAT fraud. Then there are all the issues of corporate tax fraud, which issue I addressed when answering an earlier question.
On the time frame for FTT and CCCTB, as I stated, in the discussion today with the Minister for Finance I was assured that there will be a political debate in the ECOFIN Council during the Irish Presidency. The complete timeframe will depend on the outcome of this debate because we have come to political issues, such as apportionment formula and consolidation or non-consolidation. These are political issues which must be discussed by Ministers. When they then give direction, that will define the speed of the process ahead. Of course, we are pushing progress as fast as possible, but we must have unanimity here and we must be realistic that progress is not as fast as we would like. Taking into account the strong commitment of those 11 member states to go ahead with FTT, I am cautiously optimistic that it could be negotiated by the autumn and enter into force from 2014.
I welcome the Commissioner and his staff. On the question of the CCCTB, we discussed earlier the Government's commitment on the six-months' Presidency. Has the Government given a specific commitment to the Commissioner to advance that project and to help that project along because within the State there would be resistance to it?
My second questions relates to a wealth tax. What are the views of the Commissioner on a real wealth tax? The Government is in the process of introducing a family home tax in this country to which there would be substantial resistance. I wonder what are his views on a real wealth tax on other forms of wealth taking into account total wealth.
During the Commissioner's opening remarks on sovereignty, he mentioned enhanced or greater co-operation. The last time I looked at the word "sovereignty", it meant having some level of control, having independence when one needs it and being able to determine one's own destiny. I find unusual his remark that enhanced co-operation does not limit sovereignty. Whereas there have been some positive experiences with the European Union, the one very negative contribution that would be shared, not totally across the board but by a large swathe of political opinion, is that the greater levels of co-operation and integrated have limited extremely the sovereignty available to the State. We, as parliamentarians, are aware of that because we are in the Chamber every day dealing with matters forwarded by Brussels, some of which are not so good. There has been considerable restriction in the amount of our manoeuvrability. The Commissioner spoke about it in the context of economics. He who pays the piper always calls the tune. In terms of economics, does one limit sovereignty by ceding it through enhanced co-operation or whatever one likes to call it?
Mr. Algirdas ?emeta:
Regarding Irish commitments on CCCTB, Ireland is experienced in the Presidency and knows well the role of the Presidency. The Presidency should serve as an honest broker to push ahead specific issues. I believe that Ireland will perform this duty. From today's meetings, I am confident that CCCTB will be on the agenda of ECOFIN. This file is mature for political debate. Up to now, we had only technical debate at the level of the Council. All articles of the proposal were thoroughly discussed at the technical level but now the time as come for the political discussion on the way forward. We do not expect that CCCTB can be adopted during the Irish Presidency but it is important that we have political discussion on how to go ahead with this proposal.
On Deputy Stanley's question on wealth tax, which is related to his third question about sovereignty of the member states, the Commission does not want to prescribe to member states what concretely they should introduce.
Mr. Algirdas ?emeta:
Particularly with tax matters, we cannot take a general view on one specific tax because the systems are different in different member states. In some member states a wealth tax could work perfectly to address issues but in others their systems are such that additional tax could work in the opposite way. We must look at the specific situations of member states in terms of their tax systems. Property tax would be treated as part of the wealth taxes. Our analysis shows that the property tax is probably the most growth-friendly tax among all other taxes. As I stated, however, we cannot use the approach that one size fits all. We must look at the specific situation in the member state and recommend ideas to member states on the basis of their concrete situation.
The third question, if I understood correctly, was on sovereignty versus enhanced co-operation and what enhanced co-operation means for sovereignty of the member states? Unlike in most other areas, in taxation the European Union applies the unanimity rule. Here the sovereignty is fully respected. We experienced that with savings taxation. For two years the Commission has been fighting with two member states, Luxembourg and Austria, in order to make progress on this specific file but until they are convinced, we are stuck on an important proposal. Nobody can state that in the area of taxation sovereignty is somehow undermined.
On the procedure of enhanced co-operation, there is this rule in the treaty. The treaty was agreed by unanimity - by all 27 member states. On the other hand, it is also a matter of democracy.
Nobody prohibits Ireland, Germany or France from introducing any tax, provided it respects treaty freedoms and key EU legislation, but when several member states wish to act together, why do others raise the issue of sovereignty? The consequence of not allowing enhanced co-operation is that at least some member states will introduce their own financial transaction taxes and, from the experience of the bank levy, I am sure they will overlap and result in double taxation and other problems. From the perspective of the Single Market, it is preferable for a group of member states to agree on tax policies for Europe's heavily integrated financial sector.
Mr. Šemeta stated that he is interested in developing new green tax policies for Europe. I take it he will take fuel poverty into consideration in the development of any such policies. Climate change is top of my agenda but green taxes can have a negative effect on fuel poverty rates among the most vulnerable.
In regard to protecting customers from dangerous products and illegal trade, one of the biggest problems that faces Ireland in the area of customs control is smuggling of cigarettes. Is there any way the Commission can assist in fighting that problem?
In his speech on 6 December Mr. Šemeta referred to the €1 trillion lost in tax avoidance and evasion, which equates to €2,000 per European citizen. He indicated that the Commission plans to introduce 30 measures to close these loopholes. Has a timetable or roadmap been prepared for the introduction of these measures?
I have an open mind on the financial transactions tax. In regard to the residence principle, how will payments be made by Irish firms undertaking transactions with the 11 countries introducing the tax, and is there potential for Ireland to lose revenue in this regard?
One more thing-----
Mr. Algirdas ?emeta:
The timeframe for the 34 anti-fraud measures is specifically set out in the communication. Some of the measures that will be proposed in 2013 have already been proposed, such as the co-correction mechanism in 2012, and others will come in 2013 or 2014.
Cigarette smuggling is a big issue. Some time ago we adopted an action plan to fight cigarette smuggling on our eastern border and our analysis suggests the measures we introduced helped us to address the issue in that region. However, in recent months smuggling has shifted to other countries which are not subject to the action plan and for this reason we intend to introduce a European strategy this spring which will include concrete measures for all member states.
In regard to green taxes, our flagship initiative is the energy taxation directive, which I hope will be agreed during the Irish Presidency. We are close to an agreement which will make a significant contribution as a market-based measure for greening economies. Other green taxes could also be used as market-based instruments for greening economies, and during the last European semester we made concrete country-specific recommendations to member states in which the share of green taxes is low compared to other taxes or is decreasing. These member states were asked to implement measures in the area of green taxation and we intend to proceed even further in this direction by proposing two boxes for member states in order to improve the composition of their tax systems and put greater emphasis on green taxes relative to labour or capital.
In regard to how the financial transaction tax will operate, we have not yet tabled the new proposal, but the proposal made in 2011 contains concrete criteria regarding the residence principle. Five criteria must be met in order to treat a financial institution as resident. If two eligible institutions are transacting they will both be liable for the tax, but if only one meets the criteria, it will be liable for paying the tax.
I put it to the Commissioner that he is repeating the failed mantras and ideological dogma that got us into our current desperate mess. He stated that he does not wish to interfere with countries' tax sovereignty but in the same breath he expressed a preference for taxes on property and water charges. How does he expect people who have no work and are hovering at the poverty line to pay the household and water charges that the Commission is pushing on our Government? How can he claim that his preferences on tax are beneficial to growth and jobs when growth across Europe is contracting and unemployment is at record highs? The policies imposed on this country have led to record unemployment and a dramatic contraction of the domestic economy.
Lastly, why does he continue to push the privatisation of our State assets when the deregulation and privatisation which the EU has been pushing for the past 25 years have failed catastrophically in Europe and everywhere they have been tried? Why does it continue to push that dogma and try to strip this country of its vital resources and State assets?
Mr. Algirdas ?emeta:
We cannot solve all the problems with taxation and I do not pretend that we can do so. The point is that countries cannot live without taxes. Of course, it would be nice not to have taxes at all but then one simply would not have public services. The question is the composition-----
Mr. Algirdas ?emeta:
Economic theory provides an assessment of various types of taxes which are most growth-friendly compared with others. A property tax is one of them and could work in a growth-friendly way. I am not talking simply about Ireland but about other member states which shift from labour taxation to property taxes to reduce taxes on labour and put the tax burden on property. Taxation cannot solve all the problems. If there are social problems, a system of social benefits and direct supports could be used in specific areas. Unfortunately, sometimes, we use taxes as a social tool when in many cases, it is better to use them as a revenue raiser but then provide direct social supports to those who are vulnerable.
In assessing Ireland's performance, the troika is very clear that Ireland is doing a great job. Of course, it is very painful. I completely agree with the Deputy that it is very difficult for the people to survive this situation but economic adjustment is always difficult and one must concentrate and make necessary reforms. The reforms that have been or will be introduced by Ireland will restore its growth and prosperity in the future. I agree that it is a very difficult time for many people in Ireland.
Privatisation is not a subject for which I am responsible. I have been responsible for privatisation in my country for several years and I believe that if carefully designed and well prepared, privatisation can provide both the revenue due to the public coffers and efficiency in previously public companies. Everything depends on how carefully and cleverly the privatisation is designed. I believe Ireland has a high capacity to produce efficient privatisation programmes which will work well.
I am aware that I am pressing on the Commissioner's time but I have three members who wish to ask questions. I will composite the three, ask them to composite their questions and take the replies together. Deputies Dara Murphy and Joe Higgins and Senator Barrett wish to speak.
Would the Commissioner accept that countries with low corporation tax rates and even the majority of countries that are staying out of the FTT help to encourage businesses from outside the EU and help the EU to be competitive? Does he accept that perhaps one of the more important parts of his role is to continue to encourage the countries that are assisting European competitiveness by keeping their taxes by staying out of the FTT and having low corporation taxes? Does he think it feasible to proceed with the FTT bearing in mind that 17 nations are opting out? He mentioned democracy. A total of 56% of countries are not part of it.
The Commissioner was apparently told by the Irish Government this morning that the economy is going swimmingly and we are on the cusp of a major development. The economic situation is a disaster in this country, as is austerity. The policy pushed by the Commission of forcing ordinary people to pay the price of gambling bondholders and speculators' debts for which they had no responsibility is killing our economy and its ability to raise taxes. That should be of crucial concern to the Commissioner. It is only economic growth and development that will get extra taxes for our services and people. That should be "A, B, C".
The Commissioner repeated the same propaganda of the Irish Government regarding a broadening of the tax base away from labour. The Irish Government is imposing a substantial burden on people through the new home tax. Where does the Commissioner think people will get the money for it? Does he think people have a pot of gold secreted away in their houses that they can pay? Is he aware that the Revenue Commissioners have been given the power to take the home tax from people's wages? It explodes the myth that this is somehow coming from some mysterious source other than from the wages of workers.
It is the right of every people to decide their own taxation policy but does the Commissioner expect the FTT to be implemented among the 11 member states this year? What return does he think will come to those member states from the implementation of that tax?
Mr. Algirdas ?emeta:
In respect of the FTT and its scope, the Deputy mentioned the portion of 11 versus 16 member states but those 11 member states constitute 90% of eurozone GDP and 67% of EU GDP so it is a significant group of member states. We will present the assessment of revenues for the 11 member states together with the substantive proposal on FTT. I remind members that the revenue potential for all 27 member states was calculated at €57 billion per year. Of course, the revenues for the 11 member states will be lower but they will not be proportionally lower in terms of the proportion of 11 versus 16.
We are in favour of fair competition. This question is related to a previous one about Europe in the world. It is very important that we gradually make necessary reforms in member states and at EU level which would make Europe as a whole more competitive in the world.
While it is very difficult for many member states to reduce taxes significantly due to their social models, clever design of systems and growth-friendly structures have the potential to make Europe very competitive from a taxation point of view. That is one of the major objectives we are pursuing within the framework of the European semester.
I said we would try to facilitate the Commissioner by finishing by 5.15 p.m. I thank him for attending at the committee. I thank Ms Traynor, Ms Ní Bhrion and Mr. Moutarlier also. I wish the witnesses success in their visit to Ireland and during the Irish Presidency.