Tag Archives: Reflation

Single Market Act: improving our work, business and exchanges with one another

Single Market Act: improving our work, business and exchanges with one another

Outline of the Community (European Union) legislation about Single Market Act: improving our work, business and exchanges with one another

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Internal market: general framework

Single Market Act: improving our work, business and exchanges with one another

th anniversary of the introduction of the single market. During the past two decades, the creation of the single market, with the opening of borders, has been one of the main driving forces behind growth in Europe. Recent globalisation and technological change have created new challenges for the European Union (EU). This Single Market Act therefore proposes to meet these challenges by putting businesses and Europeans at the heart of the single market in order to create a reliable tool to promote growth.

Document or Iniciative

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 27 October 2010 – Towards a Single Market Act For a highly competitive social market economy 50 proposals for improving our work, business and exchanges with one another [COM(2010) 608 final – Not published in the Official Journal].

Summary

This Communication sets out various measures proposed by the European Commission in order to relaunch the single market and make it a driving force for growth again, so as to promote a social market economy. These measures concern businesses, citizens and the governance of the single market. The Single Market Act is an initiative presented jointly with the EU Citizenship Report 2010.

Measures proposed for businesses

In the European Union (EU), 20 million businesses employ 175 million citizens and supply goods and services to 500 million consumers both in the EU and abroad.

The Commission hopes to encourage and protect the creative potential of businesses by combating piracy. The Commission therefore intends to propose an action plan against counterfeiting and piracy in 2010, as well as a framework directive on the management of copyrights in 2011.

The Single Market Act aims to promote new approaches towards sustainable growth. One of these approaches concerns the development of the market in services on the basis of the ‘mutual evaluation’ process set out in the Services Directive. It also provides for initiatives to develop electronic commerce. To enhance the ‘sustainable’ nature of growth, the Commission will revise the Energy Tax Directive in 2011. As a further step, the Commission will present an energy efficiency plan in 2011.

European small and medium-sized enterprises (SMEs) represent a significant source of innovation and jobs. To develop this potential, the Commission hopes to adopt an action plan in 2011 for improving SME access to capital markets. It also aims to link the Small Business Act with the 2020 strategy. In addition, it proposes a review of the accounting Directives to simplify SMEs’ financial reporting obligations.

To fund innovation and long-term investment, the Commission hopes to create project bonds to finance European projects. In addition, it proposes to eliminate any tax treatment that hampers cross-border activities and to make the awarding of contracts more flexible.

The Single Market Act lays the foundations of a business-friendly legal and fiscal environment. From this perspective, the Commission hopes to propose a Directive on a common consolidated corporate tax base (CCCTB) in 2011. A new VAT strategy is to be presented in the same year.

The EU must strengthen its competitiveness on international markets by further developing regulatory cooperation with its main trading partners. The idea is to develop an instrument which draws on the implementation of the EU’s international commitments.

Measures proposed for citizens

Public services and key infrastructure must be improved. To this end, the Commission intends to present a Communication including a series of measures on services of general interest. Concerning transport, the Commission hopes to adopt a revision of the guidelines for the development of the trans-European transport network. The Commission also intends to adopt energy infrastructure priorities up to 2020/2030.

In addition, it is of paramount importance to increase solidarity in the single market. The Commission must therefore conduct a systematic analysis of the social impact of proposed legislation. It also intends to re-examine the Directive on the activities and surveillance of pension funds in 2011, and to launch a consultation with the social partners in order to create a European framework for industrial restructuring.

One objective of the Single Market Act is to guarantee access to employment and lifelong learning. The system for the recognition of professional qualifications should therefore be reformed, based on an evaluation of the acquis in 2011. In addition, mobility for young people is to be encouraged by developing a ‘Youth on the Move’ card.

New resources for the social market economy must be developed. The first step in this respect must be to improve the quality of the current legal structures (foundations, cooperatives, mutual associations, etc.) linked to the social economy. The Commission also intends to launch a public consultation on corporate governance, and to propose a Social Business Initiative in 2011.

Consumers are also at the heart of the single act for the internal market. The Commission therefore intends to evaluate existing practices concerning price comparison websites and to draw up guidelines for these websites based on Member States’ best practices. It also intends to draw up a multiannual action plan for the development of European market surveillance. Its priorities also include identifying and eliminating tax obstacles.

Measures proposed for good governance of the single market

The Commission is responsible for enforcing the rules of the single market. Member States are therefore called upon to increase the rate of transposition of the single market directives and to notify the transposition measures.

Good governance of the single market must be based on a genuine electronic network for European administrations. The Commission therefore intends to present a strategy on extending the Internal Market Information System in 2011.

Dispute resolution must be improved. European consumers lose 0.3 % of Europe’s GNP each year due to sales of defective goods or sub-standard services. To overcome these problems, the Commission intends to adopt an initiative on the use of alternative dispute resolution in the EU, and a recommendation on the network of alternative dispute resolution systems for financial services.

To provide citizens and businesses with specific information on the internal market, the Commission hopes to develop the ‘Your Europe’ internet portal and to coordinate it with ‘Europe Direct’. The SOLVIT network must also be reinforced.

Finally, the Commission intends to consolidate dialogue with civil society (consumers, NGOs, trade unions, businesses, savers and local authorities).

Consultation

The Commission invites interested parties to submit their views on the relaunch of the single market by 28 February 2011.

Taxation of the financial sector

Taxation of the financial sector

Outline of the Community (European Union) legislation about Taxation of the financial sector

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Taxation of the financial sector

Document or Iniciative

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 7 October 2010 – Taxation of the Financial Sector [COM(2010) 549 final – Not published in the Official Journal].

Summary

This Communication proposes further exploration of two tax instruments which could be applied to the financial sector:

  • Financial Transactions Tax (FTT);
  • Financial Activities Tax (FAT).

Why are new taxes on the financial sector required?

The financial sector is regarded as one of the main sectors responsible for the 2008 crisis, particularly for the considerable growth in government debt in the world. As a result, the European Commission believes that the application of specific taxes to this sector could have the following positive effects:

  • these taxes could complement the essential regulatory measures which aim at enhancing the efficiency and stability of financial markets and reducing their volatility;
  • these taxes would enable the financial sector to contribute to national budgets in return for the support they received during the crisis;
  • these taxes could enable the financial sector to contribute more to public finances given that the majority of financial services are exempt from Value Added Tax (VAT) in the European Union (EU).

What is the Financial Transations Tax (FTT)?

The FTT would tax the value of each transaction relating to:

  • equities;
  • bonds;
  • currencies;
  • derivatives.

According to an estimate based on 2006 figures, if this tax had been implemented in that year, the tax revenues would have been around EUR 60 billion, with a rate of 0.1 % on stocks and bonds transactions.

The advantage of such a tax might lie in the application of the ‘polluter pays’ principle. This tax could reduce ‘undesirable’ operations by penalising short-term transactions. However, it would need to be applied by several financial centres in the world in order to achieve market stability and prevent relocations. For these reasons, the Commission believes that a global FTT would be the most appropriate.

What is the Financial Activities Tax (FAT)?

The FAT is an instrument which has been proposed by the International Monetary Fund (IMF). It has the following elements:

  • in principle it falls on total profit and wages;
  • it can be designed to specifically target economic rents and/or risk;
  • it taxes corporations.

The implementation of this tax, with a rate of 5 %, by the 22 ‘developed economies’ identified in the IMF report to the G-20, could generate the equivalent of 0.28 % of their GDP. At EU level, the tax revenues could be EUR 25 billion.

In principle, the FAT does not change the prices of financial instruments and does not affect the market structure. However, it could encourage profit shifting via relocating income and remuneration outside the EU. Certain technical aspects of this tax still need to be examined further in order to avoid such practices. The Commission believes that the implementation of the FAT would be more relevant at EU level.

Context

In its Resolution on financial transaction taxes of 10 March 2010, the European Parliament asked the Commission and Council to look at how a financial transaction tax could be used to finance development cooperation, help developing countries to combat climate change and contribute to the EU budget. In June 2010, the European Council insisted on the leading role that the EU should take in this area as part of a global strategy. However, there is currently no global consensus on additional tax instruments in the financial sector.

Driving European recovery

Driving European recovery

Outline of the Community (European Union) legislation about Driving European recovery

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Internal market: general framework

Driving European recovery

Document or Iniciative

Communication for the spring European Council of 4 March 2009 – Driving European recovery – Volume 1 [COM(2009) 114 final – Not published in the Official Journal].

Summary

This Communication sets out different measures to be taken to trigger a recovery in Europe following the financial crisis which started in summer 2007 and which became large-scale in late 2008. It presents an ambitious programme which aims at:

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  • reforming the financial sector;
  • sustaining demand;
  • boosting investment;
  • retaining or creating jobs.

Restoring and maintaining the stability of the financial sector

The report presented by the De Larosière Group (pdf ), makes supervision the cornerstone of a stable financial system.

The European Commission intends to establish a supervisory framework to detect potential risks related to financial markets early on by means of:

  • a European body to oversee the stability of the financial system as a whole;
  • a European financial supervision system.

Security must also be an integral part of future European regulations. To this end, the Commission plans for:

  • a legislative instrument which establishes regulatory and supervisory standards for hedge funds and private equity;
  • a White Paper on tools for early intervention to prevent a possible crisis;
  • a report on derivatives and other complex structured products to increase transparency and ensure financial stability;
  • legislation to increase the quality and quantity of prudential capital, to address liquidity risk and limit excessive leverage.

With the aim of rebuilding the confidence of European investors, consumers and small and medium sized enterprises in their economies, their access to credit and their rights as concerns financial products, the Commission willundertake action in the following areas:

  • increasing the efficiency of marketing safeguards for retail investment products;
  • strengthening protection for bank depositors, investors and insurance policy holders;
  • the introduction of measures on responsible lending and borrowing.

The remuneration of employees in the financial sector and its directors is also under consideration through a package of legislative proposals which aim at submitting them to prudential oversight.

Finally, a harmonised system of sanctions should be introduced in order to prevent market abuse.

Supporting the real economy

The Single Market should continue to be the motor of economic and social prosperity in the European Union (EU). To this end, Member States should increase their support for the real economy by implementing the following principles:

  • eliminating barriers to the free movement of goods and services;
  • implementing structural changes which meet climate and energy challenges through the promotion of a low carbon economy;
  • promoting the exchange of good practices and synergies in terms of European cooperation;
  • keeping the Single Market open to trade partners.

Supporting the population

The crisis has also had negative consequences on the labour market and has accentuated problems of unemployment and social exclusion. In order to combat these issues, the Commission invites Member States to initiate action in the following areas:

  • keeping people in employment;
  • reinforcing activation and providing income support;
  • investing in re-training and skills upgrading;
  • preventing over-indebtedness and maintaining access to financial services;
  • guaranteeing free movement of workers;
  • implementing support measures for unskilled workers;
  • combating school drop-out;
  • promoting flexicurity in terms of employment protection.

Context

Part of this Communication was proposed in preparation for the G20 summit in London (April 2009). The following proposals were made with the aim of mitigating the deficiencies of the global economy caused by the crisis:

  • strengthening the global financial architecture;
  • strengthening the financial framework.