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The IEA responds to proposals to crack down on tax avoidance by the European Commission

Commenting on the European Commission’s plans to address tax avoidance, Diego Zuluaga Laguna, International Research Fellow at The Institute of Economic Affairs, said:
 
“The Commission is right to point out the need for wholesale reform of outdated corporation tax systems. However, the CCCTB proposal is not the way to go. As it currently stands, the CCCTB ignores a large and growing portion of value creation by companies, namely intangible assets. To leave them out of the equation simply because they are more mobile is to deny reality. Moreover, making the scheme compulsory can hardly be justified on efficiency grounds. If the Commission genuinely believes that the CCCTB will encourage business investment and employment creation, it does not need to force companies to adopt it.
 
“Instead of punishing successful low-tax jurisdictions to cater to the wishes of high-tax Member States, the Commission should promote best practice and encourage countries to adopt a favourable business environment. The evidence is overwhelming that low and simple corporate taxation drives economic prosperity, while high and complicated taxes riddled with loopholes stifle it. If the Commission is serious about promoting jobs and growth in the EU, it should encourage Member States to cut their taxes on business.”

Notes to editors:

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The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.
 
The IEA is a registered educational charity and independent of all political parties.