Sinn Féin MEP Matt Carthy voted against the European Parliament’s reports on the proposals for a Common Consolidated Corporate Tax Base in the Economic and Monetary Affairs committee in Brussels Wednesday. A large majority of the ECON committee voted in favour of the Common Corporate Tax Base (CCTB) and Common Consolidated Corporate Tax Base (CCCTB) proposals as part of a consultation procedure.
Speaking after the vote, Carthy said: “I don’t support the proposals from the Commission for a CCCTB. While I have engaged constructively with the Parliament as part of this process, it is a seriously flawed proposal that Sinn Féin can’t support.
“Since the Commission launched its new proposal I have been arguing that we cannot make such a sweeping reform based on unreliable data. Last year our group in the European Parliamentcommissioned a study by academics from the Tax Justice Network, who found the Commission’s assessments to be flawed and called for an impact assessment to be carried out based on the new resource that has been created by the introduction of an OECD standard for country-by-country company reporting. Taking major policy steps without such an analysis would be deeply irresponsible.
“I supported the proposal to establish a compensation fund for states that experience a sudden and sharp loss of revenue if the CCCTB is introduced.
“As well as worries over the impact this will have on the Irish state’s tax powers and revenue, my key concern is that EU member states are being asked to transfer further powers over taxation to the Commission in exchange for the promise that this new system will end the ability of multinationals to shift profits – but shortcomings in the proposal mean this goal will not be achieved.
“Profit-shifting outside of the EU is not addressed at all by this proposal and will actually increase the incentive for multinationals to shift profits outside the EU.
“By creating a common tax base across the EU, the proposal will in fact promote a race to the bottom on tax rates as the rate itself will be the only measure left for Member States to compete on.
“The Parliament’s report also created a new loophole in the formula by which profits are to be apportioned, introducing the so-called ‘data factor’, which may allow misrepresentation of true economic activity by the tech giants.
“The Irish government has signalled its concerns over this proposal and no doubt will continue to do so. At the same time the government needs to act now to end the dangerous and unsustainable situation in which it actively markets the Irish state as a tax avoidance hub, and in which our public finances are severely over-reliant on the corporation tax receipts of a handful of multinationals. This situation leaves our public finances extremely vulnerable to changes in the international tax landscape, especially in the EU and the US.”