September 13, 2017 / 10:59 AM / a year ago

EU should enforce rules to prevent vetoes on tax reforms - Juncker

STRASBOURG (Reuters) - Tax reforms in the European Union, such as higher taxation of online giants, should no longer require unanimous votes from EU ministers, the head of the European Commission said on Wednesday, urging the use of rules that limit governments’ veto powers.

Jean-Claude Juncker was speaking two days before EU finance ministers meet to discuss plans to introduce higher taxes on digital multinationals like Google (GOOGL.O) and Amazon (AMZN.O), which stand accused of paying too little tax in Europe.

He urged EU states to adopt tax reforms with a “qualified majority” rather than by unanimity, a practice that has so far blocked major overhauls of tax legislation in the 28-country bloc.

His proposal would end the ability of a single country to veto such decisions at ministerial level, although national leaders would retain veto power at EU summits.

If taken up, the idea could reduce the power of smaller states, which offer some of the most favourable tax rates for multinationals, to block reforms.

Juncker said it was possible under already existing rules to switch to majority voting in certain areas, and this should be applied to decisions on “fair taxes of the digital industry”.

“I want decisions in the Council (of EU ministers) to be taken more often and more easily by qualified majority,” Juncker said.

In separate remarks, the commissioner in charge of tax issues, Pierre Moscovici, said on Wednesday that the EU executive will present a new “initiative” on digital taxation in the coming weeks.

The simpler decision-making should also be used to decide on legislative proposals on Value Added Tax (VAT) and on a common consolidated corporate tax base, which would harmonise national rules on tax deductions, Juncker said.

He added that he also supported this solution for decisions on a European financial transactions tax, a long-running plan from which most EU states have opted out, but which remains under discussion among 10 euro zone countries.

“Europe has to be able to act quicker and more decisively,” Juncker said in a speech to the European Parliament in Strasbourg, urging the use of so-called “passerelle clauses” to reduce countries’ veto powers.

These provisions, included in the EU treaties, allow for simplified legislative procedures if EU leaders decide so unanimously, and if national parliaments do not oppose it.

EU leaders, who usually meet every three months, tend to reach overall political agreements that are later translated into legislative acts by relevant ministers.

Reporting by Francesco Guarascio @fraguarascio; Editing by Mark Trevelyan

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