Common EU corporate tax rate urged

 

The euro zone should become an economic and budgetary federation with a single corporate tax rate, former president of France Valéry Giscard d’Estaing has said.

Mr Giscard, who chaired the convention that drafted the ill-fated European Constitution in 2004, said the EU was “approaching the end” of the euro zone debt crisis but that it needed a “strong gesture” to renew the integration project.

“We have a Europe of 27, soon to be 28. It’s ungovernable. And it’s thinking of enlarging further,” he told a conference in Paris.

“We must launch an initiative that sets out the future of Europe. We must propose that the euro zone become a monetary, budgetary and tax community in which those aspects would be managed along federal lines.”

The notion of a single corporate tax regime is highly sensitive for Ireland, which has resisted numerous attempts to force it into raising its 12.5 per cent rate.

France, whose own nominal rate is 33.3 per cent, has been the loudest critic of Dublin’s company tax regime.

Mr Giscard said he envisaged common budgets and a euro zone treasury.

Corporate and wealth taxes “should evolve in such a way that they would be identical within the tax community, so that by the end of the process, companies in Europe would have the same model and pay the same tax”.

He said the process of creating an economic federation in the euro zone would take 20 years and could be done through a “pact” among like-minded states rather than a treaty.

“We should ask countries openly: do you want to participate in creating this new community? Yes or no? If they say no, that’s their right.”

Speaking at the same conference, organised by the think tank Notre Europe, former European Commission president Jacques Delors insisted that Europe’s most fragile economies had no alternative to austerity if they were to remain in the single currency area.

“Of course, every day I see the suffering of the Greeks and the Spaniards, the rise of unemployment and poverty,” he said. “The price to pay is high, but on the other hand, the countries that are not affected have made a big effort – notably Germany.”

Similarly, Mr Giscard said he had little sympathy for those who blamed Europe’s creditor states for the euro zone’s woes.

“The curious thing is that the most irresponsible counties have pulled off the feat of saying the problem is that of the others who don’t want to pay for them,” he said.

Between 2001 and 2012, Mr Giscard said, the salaries of Greek civil servants rose three times faster than those of their German counterparts.

“Because the currency was stable, some states – nearly all – pursued irresponsible economic policies,” he said.