We recognize that there can be no infinite economic growth. The earth’s resources are finite.
We must arrive at a democratically organized economic system that shrinks according to plan.
EU is the richest economical area in the world. Yet the income from the burden of the taxation is not shared equally.
Tax evasion schemes, primarily but not exclusively those employed by large international corporations, are one of the most pressing problems today. There are three main areas we are focusing on: breakdown of the social contract, race to the bottom, and the digital economy.
Breakdown of the Social Contract
It is a common practice that companies are tasked by their shareholders to pay as little taxes as possible. However, it is national states that use the collected taxes to provide an environment in which the companies can thrive. The companies are granted safety, rule-of-law, enforceability of obligations, legal protection, infrastructure, education. It is thus in their best interest to support such environment by paying their taxes.
There are many tax evasion tools available and Pirates will strive to limit them as much as possible. Numbers from IMF suggest that tax evasion schemes cost us almost €500 billion a year, while in 1990 it was below €100 billion/year. This is an alarming trend. To illustrate the magnitude of the issue, €500 billion is almost half of the EU financial framework for 2014-2020, about 20 % more than the volume of charity worldwide, or 3-5 % of the worldwide tax collection.
We propose to fight this by the OECD Base erosion and profit shifting and EU Anti tax-avoidance directive to deter profit shifting to a low or no tax country and virtual transfer of non-existing goods and services.
Race to the Bottom
Many states tend to provide tax breaks or other fiscal incentives to attract branch offices of large international corporations. These often do not produce anything of tangible value and thus serve only to reduce the tax burden of their parent companies. In many cases, the effective tax rate for companies taking advantage of these opportunities was less than 1% of the tax base. The result of the inter-state competition to attract companies is a race to the bottom in terms of tax revenue.
The European Commission is struggling against the race to the bottom practices by enacting rules for the Anti-tax single internal market.
For example, in an investigation under Article 107, TFEU ruled that the Irish tax system constitutes an illegal state subsidy to Apple and that Apple is required to pay € 14 billion in tax debts.
Proposed solutions - CCCTB (Common Consolidated Corporate Tax Base); greater oversight by the Commission over tax haven in the EU. The Common Consolidated Corporate Tax Base calculates the taxation of a multinational entity in each country of the EU based on the sales, capital and labor in each of the respective country. This will eliminate mismatches between national systems, preferential regimes and hidden tax rulings, which tax avoiders exploit. It will remove the need for transfer pricing and fights the profit erosion, which is a primary route for profit shifting.
The internet is a global medium transcending geographical boundary. Since the existing legal framework is more or less territorial, it often fails to grasp intricacies introduced by digital economy.
Our goal is to bring the finances of the digital economy under democratic control and align its objectives with those of society.
Proposed solution - to change the current rules of the so-called “permanent establishment” and tax certain digital services at the place where it was created at a rate of 3 % of the turnover. This will be applicable to the companies considered as to have taxable digital presence based on their annual revenues or number of contracts between digital and their customers in a taxable year. Ultimately, the new system secures a real link between where digital profits are made and where they are taxed.
Structural funds are an important tool to strengthen the Europe’s cohesion and express solidarity in Europe still divided by the different performances of national and regional economies. We will support any effort to increase its flexibility so that it can respond promptly to the up-to-date developments of the economy or security situation. We will also support any effort to decrease the bureaucratic burden associated with the processing of the applications for subventions (for example, based on the differentiation among applicants according to the real results of their applications in the past.)
The funds should be managed in a transparent and efficient way, the EU Commission should maintain a substantial control role in the shared management of the funds. A more important role of the EU Parliament could be considered in the future.
It is fully legitimate to limit funding of the projects as a response to abuse of the funds and fraudulent use of the subsidies. However, we oppose, as a step contradictory to the original sense of the structural funds, any effort to use the limitation of the access to the funds as a means of pressure to the receiver countries in connection to unrelated political issues.
International Trade Policy
We reject multilateral international agreements that entrench dysfunctional monopolies and patents to the detriment of civil rights and human freedoms.
The Pirates require all trade agreements to respect the protection of personal data of consumers and firms.
Principles for Trade Agreements
Pirates stipulate that in all negotiations of the European Union on trade agreements the following conditions must be met:
- The European Parliament must ratify the treaty and the treaty must be negotiated upholding the principles listed below;
- There is comprehensive access to information and public hearings during the negotiating process;
- The proposed treaty includes respect for freedom of the Internet, social and civil rights, and sustainable development;
- The interests of small and medium-sized enterprises are taken into account.
Those conditions are expanded below:
Participation of the European Parliament
Trade agreements contain political decisions that are important to society and difficult to change after their adoption. Therefore, the European Parliament, the only body in the EU that has a direct democratic mandate, should have relevant position when dealing with trade policies.
The European Parliament should have access to all the negotiation material via its Committee on International Trade (INTA) and have the right to be an observer to negotiations, and the right to make binding remarks to the European Commission.
Comprehensive access to information and public hearings
The Pirates are against secret negotiations. Documents concerning the negotiations of trade agreements should be made available to the European Parliament as well as to the public. We demand that all results of consultations must be published promptly and in full.
Respect for freedom of the Internet, social and civil rights, and sustainable development
Pirates consider the people’s right to privacy and self-determination as self-evident. Therefore, they also need to be respected and promoted in the context of trade agreements.
As these principles apply to all people, the EU has to make sure that trade agreements will not allow their trading partners to breach them.
All future European trade agreements should be based on the principle of sustainable development. The agreement cannot be ratified if it has a negative impact on the environment.
The interests of small and medium-sized enterprises must be taken into account
At the moment trade agreements mainly take into account the interests of global enterprises, while small and medium-sized companies rarely benefit; SMEs are increasingly ousted from the market. We want to change that.
The responsibility of international corporations
The European Union must make it possible to engage the legal responsibility of companies in the event of infringement of European environmental law for their actions on the territory of the Union but also for their actions outside the territory of the EU if in the latter case the seat of their parent company is in the territory of the European Union.