EU digital tax crusader hopes to sweet-talk Ireland

Europe Letter: France’s Bruno Le Maire is mobilising for a cause Dublin is dead against

Bruno Le Maire. Photograph: Frederick Florin/AFP/Getty Images

Bruno Le Maire. Photograph: Frederick Florin/AFP/Getty Images

 

To watch Bruno Le Maire campaigning for EU digital taxation is to see a driven man in full election mode. The French finance minister is not about politely making a case to ministers – he’s doing that too – but declaiming, barnstorming and mobilising.

And making a case that is not about dry, unsexy economic competitiveness, but about “fairness”, “justice”, putting manners on the big boys, the giants of the digital world, for the sake of the put-upon little man. It is all about “restoring fiscal justice in Europe” and upholding “European economic sovereignty”, he claims. 

Above all, he says, it is about demonstrating to voters in next year’s European elections that Europe can effectively address the issues of our time collectively, that it can act together with one voice. It is an answer to the lies of Eurosceptic populism, he says.

If introduced, the measure would see tax on the revenues from some digital activities levied in the markets where users are located. Initial Revenue Commissioner estimates were that the tax could cost the Irish exchequer some €160 million a year.

Le Maire was in Strasbourg on Tuesday for the plenary session of the European Parliament. It was an opportunity to lobby MEPs and enlist the press before finishing the busy day off with a public meeting in the town hall. He has a hashtag – #wepayyoupay – and billboards comparing the average tax paid by ordinary companies – 23 per cent – to the negligible 9 per cent paid on average by the digital giants.

A deal on the digital sales tax – a 3 per cent tax on sales of advertising by the 115 biggest online companies – would be done, had to be done, he proclaimed, insisting that the four or five reluctant states, Ireland included, would be sweet-talked around before then. Rational persuasion would triumph, he said. When Emmanuel Macron had launched this drive, he said, there were five member states in support of it – France, the UK, Germany, Spain and Italy.  Nineteen others have joined them.

Irish compensation

Irish concerns would be met, he told me; at a recent ministerial  meeting  a spokesman had said that Ireland could be compensated for any financial losses to its tax base. If it asked for it.

Dublin has not asked – will not ask – for compensation, standing firm on the principle that this is a bad tax, that the authorities should not be levying on income rather than profits, that it is probably based on dodgy law, and is almost certain to exacerbate transatlantic trade tensions.

It would also result in double taxation of businesses, a point I put to Le Maire. Not at all, he was adamant. “There is no double taxation in the proposal.”

Getting the parliament behind him will not secure the voting unanimity he needs at the European Council. But this is as much about campaigning and being seen to campaign as winning.

At a reception in the parliament he demonstrated the breadth of the alliance in favour of the tax – glossing over some German wobbles on the legislation. Elmar Brok, the veteran German CDU politician, offered reassurance – every time a summit loomed, he said, the Financial Times insisted that the French and Germans were at loggerheads. When the summit happened the truth of their unity of purpose was revealed. On the digital tax it would be the same, he said.

Major loophole

The two chairmen of the key committees on tax and the economy were there to lend their support. Socialists, conservatives from the European People’s Party (minus Fine Gael), Liberals, hard left MEPs – all represented.

Roberto Gualtieri, the Socialist chair of the  Committee on Economic and Monetary Affairs, spoke of the absence of digital taxation as a “major loophole in our economic and social model”. Profits, he said, should be taxed where they arise.

Pervenche Berès, a Socialist, blasted the Irish line that they would make agreement more difficult at the OECD  level – the organisation is to report next spring on international corporate taxation and is expected to produce measures that can be agreed at a global level. On the contrary, she said, the OECD would be delighted by the impulse Europe could give to the whole process by giving a lead.

Le Maire had even invited Oxfam, which has been campaigning on tax justice internationally for years; its spokesman proclaimed that it was on the “same side and right side of history this time”.

The campaign rolls on. The minister has been to Ireland – his spokesman insisted that they had seen some softening – and will be back shortly. No stone unturned.

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