The EU should give itself new tax-raising powers and clamp down on tax havens as it looks to curb the economic damage wrought by the coronavirus pandemic, says Poland’s finance minister.
The bloc’s leaders will on Thursday discuss the EU’s next budget and its response to the Covid-19 outbreak, including a French-backed proposal to create a €500bn package to help mitigate the impact of the lockdowns introduced across the continent to fight the virus.
Tadeusz Kościński said Poland — which is one of the main recipients of EU subsidies — supported ideas such as the French proposal that would help eurozone and non-eurozone states. But he insisted they should be financed by raising new funds, rather than reallocating those included in spending plans already put forward by the European Commission.
“The EU is going to need a lot of new money for its next budget and hopefully a lot of money can [be raised from sources other than] the current budgets of member states,” said Mr Kościński, who took over as finance minister last year, after the rightwing Law and Justice party won re-election.
“We all have problems [with coronavirus] so they should be looking at tax havens, a digital tax, also a financial transactions tax and a carbon border tax: taxes that will hit other economies, not necessarily [EU economies].”
Giving the EU greater powers to levy its own taxes is a controversial topic for many member states, which jealously guard their ability to control tax revenues. But Mr Kościński said the coronavirus pandemic made the need to tax footloose capital through measures such as a digital tax on global companies such as Google and Amazon all the more urgent.
“It’s absolutely ridiculous that we are all looking at where we can find as much money as possible to resurrect our economies and there’s money being sent to . . . the US,” he said, referring to the fact that many of the world’s biggest digital groups are based there.
Poland has been one of the EU countries less affected by the deadly pandemic, which has infected more than 800,000 Europeans and killed more than 97,000. As of Sunday, the central European nation had reported just 9,082 cases and 350 deaths.
But like the rest of the continent it is bracing for severe economic fallout as the lockdowns have sent the global economy into hibernation, with the country’s tourism and retail sectors likely to bear the brunt.
Tadeusz Kościński, finance minister of Poland, said: ‘It’s absolutely ridiculous that we are all looking at where we can find as much money as possible to resurrect our economies and there’s money being sent to . . . the US’ © Charlie Bibby/FT
Mr Kościński said he expected Poland’s gross domestic product, which grew 4 per cent in 2019, to shrink between 4 and 4.5 per cent this year, before rebounding next year, although he cautioned the situation was changing rapidly.
He also said the government — which had been planning to run a balanced budget — would now run a deficit of more than 4 per cent. Unemployment was also likely to spike, although he declined to say by how much.
Poland’s government has launched initiatives to protect jobs and support businesses that have had their revenues evaporate because of the crisis, but Mr Kościński said the pace of economic recovery would also depend on other EU states.
“We are a big country with a big population, so we’re a big market, but . . . we’re also very dependent on where we are in the supply chain, and what happens before and after us,” he said.
Given these interlinkages, Mr Kościński said it will be essential for EU member states to agree on a comprehensive response to the crisis, although he acknowledged this would be difficult.
“Everyone’s got their own interests. Now [the question is] are they going to look beyond that and go for international solidarity, or are they each going to be focused on their own backyard,” he said, adding: “This is a big test for the EU.”
Source: Economy - ft.com
