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30/05/2011 Sven Giegold: “There needs to be a minimum tax rate in the EU to prevent dumping”

On May 11th and 12th the 6thRendez-vous européens de Strasbourg’ (European meetings in Strasbourg) organised by the ENA (France’s Ecole Nationale d’Administration) in the European Parliament took place. Every year, this event brings together people from European institutions, national administrations as well as private decision-makers and researchers who want to debate policies, careers and European governance of tomorrow. As part of this, Toute l’Europe attended the traditional breakfast meeting on the subject, “From the Euro crisis to an Economic Union?” The guest of honour was German MEP Sven Giegold and Toute l’Europe took the opportunity to interview him there.

Biography

Sven Giegold is a founder of the Ecological Centre in Verden (Germany) and a member of the Greens/EFA group in the European Parliament. His main work is within ECON (the economic and monetary affairs committee) and CRIS (the special committee on the financial, economic and social crisis).

Toute l’Europe: You are rather pessimistic about the Euro crisis. Why?

Sven Giegold: As things stand, the aid packages cannot work. We need the political will to quickly modify how these aid packages function because the weakest countries need some breathing space. This means lower interest rates, greater contribution from the stronger countries and more concessions. Greece for example has to reduce its military spending and be tougher when it comes to taxing wealth. If they do not commit to these changes, the aid packages will be ineffective. In Greece’s case, debt restructuring is inevitable.

Toute l’Europe: What do you say to those who, particularly in Germany, who are advocating for Greece to exit the euro?

Sven Giegold: I find that completely dishonest. The economic and political cost of exiting the euro is unacceptable, not only for Greece but for Europe as a whole. As soon as there is a hint of an exit from the Eurogroup, investors will want to put their capital somewhere safe and that will inevitably lead to a banking meltdown. Furthermore, the risk of contagion would be high as investors will flee from the weakest countries.

So it is necessary to create aid packages that can be supported by Member States but they must also be reformed to create dynamic economies that respond to the constraints of the euro.

“Is tax harmonisation necessary and feasible in today’s Europe?” Francois-Gilles Le Theule, the ENA’s Director of European Affairs, asked at the breakfast. According to Sven Giegold, “we must start by harmonising the Eurozone. Ireland will come round!”

Toute l’Europe: You are advocating for European tax harmonisation. What are the advantages of this?

Sven Giegold: With a single market, there is no need for 27 different tax systems competing amongst themselves with the winner being the small nation that offers the lowest tax rate. That is detrimental to everyone so we need common rules including a common tax base. We also need a minimum tax rate in the European Union to avoid dumping. This will benefit all states more, including Greece and Portugal.

Toute l’Europe: Is this feasible in the short term given the opposition of Member States such as Ireland?

Sven Giegold: It is a question of political will. When we see all that has been possible over the last two years, I find it odd that as soon as it comes to taxing capital gains, the possibilities fade. Giving gifts to banks was not a problem and was even partly negotiated during night-time sessions! So why would effective taxing of great wealth be impossible?

Toute l’Europe: The Economic Governance Package goes before the plenary session in July. How are the negotiations going?

Sven Giegold: The future of this package is still uncertain. On May 17th, the ECOFIN Council established the Council’s negotiating mandate but progress has been extremely slow. Be that as it may, Council will have to make a lot more effort, particularly on the question of the automatic nature of functions and decisions, and Germany will have to accept that the adjustment efforts apply also to them.

Toute l’Europe: As a member of the CRIS committee, what dossiers have you worked on this year?

Sven Giegold: The committee has spent a lot of time working on its interim report, one of the main points of which is financing European investment. For all that, CRIS is not a priority for me because, at the moment, there is a lot of legislation coming out of the economic and monetary affairs committee which takes precedence over the special committee.

The role of the CRIS committee has weakened over time as the legislative consequences of the crisis are being prioritised.

 

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