Oireachtas Joint and Select Committees

Wednesday, 13 March 2019

Committee on Budgetary Oversight

Scrutiny of European Commission Country Report Ireland 2019 and European Semester

Mr. Carlos Martínez Mongay:

I take good note of the Chairman's concerns. It is difficult to discuss perceptions. I know that small member states sometimes have the perception that the Commission only looks at large member states whereas I can tell the Chairman that at the same time, a number of big member states complain about the Commission looking I do not know where. We do not look at the small member states or the big member states. I do not know where we look. The Commission looks at what the Commission has to look at, namely the treaties. Its role is to guarantee that the treaties are implemented. In this regard, one need only look at the discussion and debate on industrial policy where the Commission is considered to be against the interests of certain European champions. The Commission is precisely trying not to get out from the treaties. It is trying to apply the treaties which, at the end of the day, are what member states have signed. This is what they signed, not the Commission.

We are aware that the European Union is not a federal state. However, we are also aware that the taxation of companies is becoming a capital issue. This is related to a number of changes that are taking place at a global level in technology. The idea behind the digital tax is that certain companies are clearly escaping the obligation to contribute to the common good while at the same time using the common good. This is important to keep in mind. We are not a federal state but we were not a federal state when we decided to harmonise VAT either. However, the member states decided at a given moment that there was a need to harmonise indirect tax in order to underpin the functioning of the Single Market. When we see the mobility of certain tax bases and the fact that certain companies are able to shift the tax base from one country to another, a certain degree of harmonisation is needed. These companies are using the Single Market, which is a high-level rental market, to make profits to which they do not contribute.

Taking into account all the social needs in our countries, it was worth considering the possibility of harmonising certain tax bases and certain taxes. It is true that the ECOFIN rejected the proposal, but at the same time we have a very good technical document, which has been acknowledged by everybody as being technically good, to allow the member states who want to implement it to do so. As I said, however, the needs are there and we need to finance those needs to avoid inequality going out of control and so on. I have to accept the ECOFIN result the other day but at the same time we need to consider all these issues collectively because these companies which do not have a flag are using certain tax circumscriptions to avoid paying taxes and contributing to the common good.