Former Prime Minister Alfred Sant said that the smaller and peripheral countries of the European Union should not be denied the remaining flexibility in tax policies. It is unfair to impose tax harmonisation to claim to curb tax evasion by multinational companies, Dr. Sant told the European Parliament in Strasbourg during the debate on the 'Commission decision adopted on the Corporate Tax package'.
Dr. Sant said that so long as it introduces better transparency in tax matters over the European Union, the Commission decision on the corporate tax package is welcome. ‘However, where it serves as part of a wider programme to introduce harmonisation of taxation across member states, the package must be critically scrutinised. Member states, especially in the Eurozone, are implementing uniform rules in financial and economic decision making. This is working to the advantage of members having better economic endowments. One cannot deny to those who have less endowments the remaining flexibility in tax policies, especially smaller and peripheral countries.
Dr. Sant said that current accounting systems to measure profits and expenses date from when manufacturing was the main sector of economies. As services and digital activities, accompanied with a globalized mode of production and marketing, become increasingly predominant, the task of determining profits and expenses is now much more complex.
Dr. Sant said that in the circumstances the easiest way by which to claim to be curbing tax evasion by multinational companies, is by imposing tax harmonisation, using existing accounting methods. ‘This is unfair. Indeed, the characteristic of any corporate tax package should be flexibility, equally applicable to all, not only to the bigger economies as has happened with the ‘Stability and Growth Pact’ rules.’ remarked Alfred Sant.