Dáil Éireann Debate, Tuesday - 9 June 2020
45. Deputy Michael McGrath asked the Minister for Finance if there will be conditions assigned to the €750 billion stimulus proposal by the European Commission, specifically in relation to corporation tax or digital tax; and if he will make a statement on the matter. [10327/20]
Amharc ar fhreagraAs the Deputy will be aware, the European Commission has, on 27 May, published revised proposals for the next Multiannual Financial Framework (MFF) to run from 2021-2027 to be supplemented by a proposed temporary European recovery instrument called “Next Generation EU”.
The total amount being proposed for the period 2021-2027 is €1.85 trillion in commitments (2018 prices) - €1.1 trillion for the MFF and €750 billion for “Next Generation EU”.
It is proposed that the “Next Generation EU” financing be raised by “temporarily” increasing the Own Resources ceiling to 2.00% of EU Gross National Income (GNI) allowing the Commission to borrow €750 billion on the financial markets to fund measures over the period 2021 - 2024. €500 billion of “Next Generation EU” financing will be in the form of grants to Member States, with the remaining €250 billion as loans.
The Commission proposes that the money raised for “Next Generation EU” be invested across three pillars:
1. Support to Member States with investments and reforms, including supporting Member States in accelerating the transition towards climate neutrality;
2. Kick-starting the EU economy by incentivising private investments; and
3. Addressing the lessons of the crisis with a new Health Programme, EU4Health, to strengthen health security and prepare for future health crises, and additional funding for external action, including humanitarian aid.
The Commission propose that the centre-piece of the recovery plan will be a new Recovery and Resilience Facility with a total fund of €560 billion (€310bn in grants and €250 billion in loans). The aim of the facility will be to support investment and reforms essential to a lasting recovery, to improve the economic and social resilience of Member States and to support the green and digital transitions. Support under this facility is to be focussed where the crisis impact and resilience needs are greatest. The Commission propose that this facility will be firmly embedded in the European Semester and that Member States will draw up national recovery and resilience plans as part of their National Reform Programmes. It is proposed these plans will set out investment and reform priorities and the related investment packages to be financed under the facility with support to be disbursed depending on progress made and on the basis of pre-defined benchmarks.
The Commission proposes that the “Next Generation EU” funding be channelled through EU Budget programmes, to be repaid back between 2028 and 2058 drawing on future EU Budget contributions from Member States or the Own Resources of the Union.
The Commission favours the introduction of new Own Resources to facilitate the repayment of the market finance raised and to help reduce the pressure on national budgets. They have indicated that they may propose additional new Own Resources (such as an extension of the Emissions Trading System based own resources to the maritime and aviation sectors, a carbon border adjustment mechanism, a single market levy and a digital tax) at a later stage of the 2021-2027 financial period.
Ireland has broadly welcomed publication of the Commission’s Post 2020 MFF proposals coming on top of the three safety nets of up to €540 billion already agreed by EU leaders to support citizens, businesses, and countries and the ECB measures to increase liquidity.
The Commission’s proposals are detailed and ambitious and are still being examined to assess the implications for Ireland’s priorities at an overall and sectoral level, for Ireland’s contributions to and receipts from the EU Budget, as well as for the domestic budget.
With regard to the Commission’s stated intentions’ to bring forward tax proposals for new Own Resources, the Deputy will have noted that the Commission have expressed their support for the OECD process as the best forum in which to address issues arising in the field of international taxation.
Nevertheless, Commissioner Gentolini recently re-affirmed his intention to propose a new EU levy on digital services and a minimum corporate tax rate in 2021, if global negotiations fall short. While the Commission proposals for future new own resources echoes this ambition, such moves will require the agreement of all Member States. The economic context has changed dramatically in recent months and all countries are now considering what impact the current crisis may have on their overall tax systems, which may influence their views on international tax issues.
Much progress has been made in the current discussions at OECD, and technical work at the OECD is continuing. The intention is to find political agreement for work on addressing tax and digitalisation by the end of 2020 and we remain focused on that goal.
Heads of State and Governments are expected to discuss the Commission’s MFF and “Next Generation EU” proposals at European Council on 19 June. There is considerable time pressure on the European Council to reach political agreement (requiring unanimity) on the revised package by July to facilitate negotiation with and consent from the European Parliament in time to ensure that the next MFF can come into operation from 1 January 2021.
