Europe’s had a common market for over thirty years. The Single Market means there is free movement of goods between EU Member States (and some non-EU countries, such as Switzerland); we are allowed to work anywhere, offer and accept services across borders, and can also transfer and invest money into other Member States. However, some argue that these “four freedoms ” have also resulted in injustice, for example when different wages or tax rates apply across the continent. They believe it would be fairer if the same tax rates were introduced throughout the Single Market.

Tax is, of course, the responsibility of national governments. However, the Single Market has long since meant many regulations are adopted at the European level, not the national level. The Brexit process had demonstrated just how interconnected the European economy is – and how much we all benefit from the Single Market.

What do our readers think? We had a comment sent in from Metz. He says that taxes need to be harmonised, at least within the euro area: “How can you have a common currency, but then not set the same rules?”

To get a response, we put Metz’ question to Florian Toncar, financial policy spokesperson for the liberal German Free Democratic Party in the Bundestag. Would he agree with Metz?

It is okay that we have different taxes in different EU Member States, but we must aim to introduce the same corporate tax for companies. Businesses need the same tax base. This could prevent tax loopholes that companies have exploited in the past, for example: to transfer a company’s profits abroad in order to save taxes.

Of course, it can be an advantage to introduce a more attractive tax system than other Member States. Tax competition is completely legitimate. But work needs to be done to ensure that there are no more tax loopholes at the expense of everyone. The European Commission has also intervened many times and has punished both companies and states that have benefited from these loopholes.

For a different perspective, we also spoke to Alejandra Almarcha, political advisor to the Young European Federalists (JEF). What does JEF say about tax harmonisation?

As federalists, we believe some kind of tax harmonisation in the EU is needed: not only for the Eurozone, but for the Single Market as a whole, too. However, different solutions are relevant for the two areas.

The Single Market, to function correctly, requires that companies and trade in goods and services to be taxed to some extent in the same way. As an example, we have the issue with “the tax base of a value-added tax (VAT)”. VAT was developed with the objective I mentioned before in mind, but now we have to be able also to tax properly company profits, their incomes, for which we would also need a common minimum rate of taxation. That would avoid that companies can shop for the best rates and, again, disrupting the working of the Single Market. Unfortunately, what we have is excessive tax competition in the Single Market.

In the case of the Eurozone, it would also be beneficial from a common income tax, if this cannot be achieved for the whole EU, more or less the whole Single Market. But the Eurozone also needs its own specific solutions, such as an EU Financial Transaction Tax or other forms of taxation of the financial and banking sectors. These common taxes are needed as part of the common rules for the Capital Markets Union and the Banking Union, which in turn reinforce the Eurozone.

Should all Europeans pay the same tax? Should taxes be harmonised at the EU level, or should they stay at the national level? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!

Image Credits: Bigstock (c) artemisart; Portraits: Toncar (c) Dt. Bundestag, Almarcha (c) Tomás Escolano

39 comments Post a commentcomment

What do YOU think?

  1. avatar

    Of course not, one of unique thing in EU the diversity, socialist regime to east and south (poor country), capitalist or close to capitalism north and west, depending on this regime the tax system change

  2. avatar

    If wi take the same money .if. Wi have all work .if the everything is same.Greece.

  3. avatar

    who the hell comes up with these twisted ideas? if you put the same tax for everyone in European Union then please have the same degree of life, access to life’s needs! Beg your pardon but that is a few lunar years away! If you stay in an office and from time to time feel a bit irritated by thoughts crossing cerebral fields, just let it be, do not react and propose things like the question asked! Rest my case :)

  4. avatar

    The EU, on the verge of ending, talk about taxes? This the coronavirus, is the Marxism coming

    • avatar

      I work in Health. EU is going to sacrifice freedoms, thats why Marxism is on the way.

  5. avatar

    An all out flat income tax of 10% in all of the EU might not be a bad idea actually.

  6. avatar

    I’d give the Comission the power to abolish taxes and regulations in all EU member states. Not to raise them or impose new ones. If a member state desires to harmonise their tax system with others, it’s free to do so, but why force it? Oh, and tax the rich, of course, with a flat rate income taxation with tax exemptions and negative income tax below a certain earning amount.

  7. avatar

    only if everyone gets the same benefits and pensions.

  8. avatar

    I think it’s great so big economy Germany can export like crazy and other countries cannot compete by deflating the currency or offering lower tax rates

  9. avatar

    The Europeans should pay a European tax…just to know, I like many others, I Don t like taxes but if we want a European stronger it was to be like that

  10. avatar

    All Europeans should pay the same tax rate and have the same wages/salaries, same prices, etc. Currently the western countries are pretty much exploiting the poorer eastern countries, that’s what’s going on, looking for cheaper workforce and production costs. The current model of the Union is too unfair.

  11. avatar

    This is like to ask: Should all Europeans have the same height and weight?

  12. avatar

    No…..countries are different….and some are more greedy than others.

  13. avatar

    No but it is time to build a common tax and social policy. Without it euro will be a failure

  14. avatar

    Only if they the get the same salary/wage/payment.

    • avatar

      and they all have a tax 10%. Then we would build a healthy financial paradise.

  15. avatar

    All services would have to be made uniform; in Italy we pay more taxes for notoriously less services, thanks to our national governments and administration, so a full overhaul would be required.

  16. avatar

    If they get the same salary?

  17. avatar

    Its a fair start. Also same financial & state support to creativity.

  18. avatar

    Yes, same tax (percentage) on same wages.

  19. avatar

    Why? Do we all face same situations or enjoy same level of social security plans?
    Are you totally stupid?

  20. avatar

    Well it could be na idea but then the salaries should be the same everywhere. What do you think?

    • avatar

      Nice !
      So who is going to make up the difference in salaries ?
      I don’t think anyone will want to work on Romanian salaries.

    • avatar

      or for the Portuguese salaries

    • avatar

      It seems you do care, given that you’re commenting…

    • avatar

      No not really as I voted to leave the EU is finished they just don’t know it yet it’s called the domino theory

    • avatar

      and yet, you can’t get over it and you’re still here commenting. Sad.

    • avatar

      No I am just happy that I can comment and it doesn’t matter what they do in Europe it won’t affect us across the channel

    • avatar

      Where did you study macroeconomics and geopolitics, Kevin? In the University of Life?

    • avatar

      and yet…you’re still here, commenting because you don’t have anything better to do . And that comment confirms you have no technical preparation whatsoever, never received higher education, but still feel somehow entitled to comment on matters with a high level of macroeconomic and geopolitical complexity. PS: have you checked how much the GBP has dropped ever since the referendum, or how much inflation has risen, or how much direct foreign investment has GB lost? Not that you understand any of those concepts, but still…it´d be good to try! PS 2: All EU flags are still hoisted in Italy, maybe you want to check out some better sources, it’s not advisable to be informed by The Sun and The Daily Express. Cheers Kev!

    • avatar

      You wouldn’t need a degree to know that the EU is finished the Italians will be next to go they are already taking EU flags down the majority in the UK voted to leave and that is the best thing we have done in years

  21. avatar

    Yes, the same tax= Euro same salary.

  22. avatar

    Same taxes and same salaries!!!

  23. avatar

    Should EU companies that outsource in other EU countries pay the same salaries like at home?

    • avatar

      In that case they wouldn’t outsource to other EU countries like Bosch, BMW etc did to Hungary, but just go and build factories directly in China^^

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