Petition to the governments of all Member States and to EU institutions
Funding the Corona Recovery by curbing tax dumping and money laundering

Funding the Corona Recovery by curbing tax dumping and money laundering

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ITALIANO | DEUTSCH

Joint Italian-German appeal to the governments of all Member States and to EU institutions

The Corona Virus epidemic and its consequences for our societies and economies pose a challenge for all of us unprecedented in the history of the European Union. We are glad that in both our countries the spread of the virus is now under better control. A number of restrictions of the public life and economic activity could already be lifted. However, this does not mean that the end of this crisis is in sight. We are now entering a new phase. Companies of any size have been hit hard either by a complete stop or slow-down of their activities. One thing should be clear, when we debate the restart of our economies in Europe: This crisis hits all countries simultaneously and no single country is in this crisis because of bad economic or fiscal policy choices of the past, but because of a terrible pandemic. That is why we need to shoulder the burden of this crisis in Europe together. We therefore repeat our call for the issuing of European Health Bonds with a clear and defined common objective and subject to jointly agreed guidelines. Without burden-sharing, we would not only risk the stabilisation of the health system and the economic recovery of some countries, we would put the entire internal market at risk and with it our project of unifying Europe. 

There is no doubt that the recovery of our economies demands an unprecedented amount of public money. At the same time tax revenues of our states dramatically decrease due to the economic crisis. Even if the resulting increase of new public debt is justified it would be irresponsible to forget the revenue side of public budgets. Increasing taxes is not a good guardian for economic recovery. Therefore, we should first and foremost concentrate on generating resources by curbing tax dumping, tax fraud and money laundering. In the past a lack of European unity has limited progress towards a common tax policy and a determined fight against financial crime. 

In light of the magnitude of this Corona crisis and rising public debt, we call for a comprehensive zero tolerance policy against money laundering, tax fraud and tax dumping in Europe. Such a zero tolerance policy should consist of five key actions:

  1. Europe needs a common minimum effective tax rate on corporate income. If international efforts in the framework of the OECD do not come to an agreement as foreseen by the end of this year, the EU has to set its own minimum effective tax rate. This rate should be applied to large corporations on the basis of a common consolidated corporate tax base (CCCTB). These should also publicly disclose profits and taxes paid on a country by country basis as suggested by the European Commission and supported by the European Parliament.
  1. During the Corona Crisis digital business models have gained market shares from traditional businesses. This push towards digitalisation may well boost useful innovation. At the same time the competition is not fair if large digital companies pay hardly any corporate income taxes in Europe while traditional companies do. This is why Europe should introduce a common approach to digital taxation which ensures that profits made in Europe are also taxed in Europe on a fair basis. Until a corporate tax reform is in place, the digital taxation proposal by the European Commission and supported by the European Parliament should come into force as soon as possible.
  1. A lack of resources and mutual trust between Europe‘s tax administrations is the basis for large scale cross-border tax fraud in VAT of about € 50 billion and dividend arbitrage. It is high time for the currently blocked VAT reforms to be adopted by member states as well as a European response to dividend arbitrage to be drawn up.
  1. Tax competition in Europe is about to spread from capital income to personal income taxation. Non-dom regimes, lump sum tax payments, special treatments of some types of income in bilateral tax agreements, free ports, golden visa and citizenships all have the potential to weaken comprehensive and progressive income taxation in the member states. Europe needs to develop a framework regulation in order to protect progressive income taxation from special regimes.
  1. Curbing money earned through criminal activities is a boost for citizens‘ security as well as for honest businesses. Fighting money laundering will also generate additional public revenue. Public revenue lost according to the EU Commission is of a staggering €160 billion per year. According to Europol only 1% of criminal money is being seized. Italy has demonstrated that member states can be successful in this domain through legal reforms which should be copied all over Europe. But in any case, Europe also needs an effective money laundering supervisor and regulator. For the large scale cases of financial crime a European financial police should be created in the framework of Europol.

As tax policy normally needs a unanimous decision by all EU member states, progress towards tax justice is notoriously slow. Also common decision making in matters of security cooperation are difficult. But, there is room for maneuver. Measures for corporate transparency and against money laundering are decided by majority voting. Furthermore, the European Commission could use Article 116 TFEU as a legal base for potential future tax legislative proposals if competition in the single market is distorted and if no agreement has previously been reached between the Member States. The level of tax competition in the European Union is such that the new European Commission has already indicated seriously looking into this option, which would guarantee equal decision-making power to the European Parliament. It is high time to use this option. Lastly, member states should foster cooperation in global and multilateral institutions to promote international decisions for tax cooperation.

This crisis demands determined decisions for fairness and efficiency on the income side of public budgets. The time to act is now.


First signatories

  • Gian Paolo Accardo, VOXeurop
  • Franco Bassanini, former Minister, President Astrid Foundation
  • Prof. Ansgar Belke, University of Duisburg-Essen
  • Prof. Tito Boeri, Bocconi University, former President of INPS
  • Prof. Peter Bofinger, University of Würzburg
  • Angelo Bonelli, Europa Verde
  • Massimo Bordignon, Catholic University, Rome
  • Prof. Gerhard Bosch, Institute for Work, Skills and Training, University Duisburg-Essen
  • Franziska Brantner, MP
  • Prof. Franco Bruni, Bocconi University; Vice President, Italian Institute for International Political Studies (ISPI)
  • Rocco Cangelosi, Ambassador, State Councillor
  • Innocenzo Cipolletta, Chairman of Assonime and Associazione Italiana del Private Equity, Venture Capital e Private Debt (AIFI), former Director General of Confindustria
  • Prof. Carlo Cottarelli, Former Executive Director of the International Monetary Fund Board
  • Prof. Pier Virgilio Dastoli, President, European Movement Italy
  • Prof. Sebastian Dullien, Scientific Director, Institut für Makroökonomie und Konjunkturforschung (IMK)
  • Prof. Trevor Evans, Berlin School of Economics and Law
  • Piero Fassino, MP Vice-Presidente, Foreign Affairs Committee, former Minister for Foreign Commerce and former Minister of Justice, Italy
  • Prof. Maurizio Ferrera, University of Milan
  • Giampaolo Galli, Catholic University, Rome
  • Alexandra Geese, MEP
  • Sven Giegold, MEP
  • Prof. Enrico Giovannini, Former Director Istat, former Minister
  • Elena Grandi, Europa Verde
  • Prof. Gerd Grözinger, European University Flensburg
  • Prof. Ulrike Guérot, European Democracy Lab
  • Prof. Arne Heise, University of Hamburg
  • Prof. Costanza Hermanin, College of Europe, John Cabot University
  • Helena Janeczek, Author
  • Prof. Jakob Kapeller, University Duisburg-Essen
  • Jan Pieter Krahnen, Economist
  • Gad Lerner, Journalist
  • Jagoda Marinic, Author
  • Giampiero Massolo, Chairman of Fincantieri and the Italian Institute for International Political Studies (ISPI), former secretary general Ministry of Foreign Affairs
  • Francesca Melandri, Author
  • Cesare Merlini, President of board of trustees of Istituto Affari Internazionali
  • Marcello Messori, Director of the LUISS School of European Political Economy (SEP)
  • Stefano Micossi, Director General Assonime, Chair of the Scientific Council, LUISS School of European Political Economy
  • Prof. Massimo Morelli, Bocconi University and CEPR
  • Prof. (em) Claus Offe, Hertie School of Governance
  • Pier Carlo Padoan, MP, former Minister of Economy and Finance
  • Alberto Pera, Associazione Antitrust Italiana, Chairman; Bim Private Bank
  • Ruprecht Polenz, Former MP
  • Prof. Jan Priewe, HTW Berlin
  • Prof. Miriam Rehm, University Duisburg-Essen
  • Prof. Lucrezia Reichlin, London Business School
  • Prof. Rene Repasi, Erasmus University Rotterdam
  • Prof. Thomas Rixen, Free University, Berlin
  • Prof. Hartmut Rosa, University of Jena
  • Ferdinando Salleo, Former Ambassador
  • Sabine Sasse, United Europe
  • Prof. Thomas Sauer, Ernst-Abbe University, Jena
  • Prof. Moritz Schularick, Bonn Graduate School of Economics
  • Stephan Schulmeister, University lecturer
  • Prof. Gesine Schwan, Humboldt-Viadrina Governance Platform
  • Prof. Marco Simoni, President, Humane Technopole
  • Prof. Jens Südekum, Düsseldorf Institute for Competition Economics
  • Prof. Guido Tabellini, Bocconi University, principal
  • Prof. Valeria Termini, University of Roma Tre
  • Prof. Claus Thomasberger, HTW Berlin
  • Prof. Hans-Michael Trautwein, University Oldenburg
  • Prof. Achim Truger, University of Duisburg-Essen
  • Prof. Brigitte Unger, University of Utrecht
  • Prof. Michael von Wuntsch, HWR Berlin
8. June 2020

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#weareinthistogether start this petition
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