The role of corporate taxes in corporate governance

Key points

The EESC:

• believes that the response in the private sector to the Recovery Plan and NextGenerationEU will be key to delivering and effectively achieving a greener and digitalised economy. Public policies must therefore provide the appropriate incentives. Economic policies, in particular tax policies and policies impacting on corporate governance, must provide for an efficient decision-making process and efficient allocation of resources, promoting the achievement of social objectives.

• assesses that, to deliver a sustainable green and digitalised economy, the debt-equity financing distortion in taxation needs to be addressed.

• urges Member States to make their tax systems more neutral with regard to debt and equity financing. This would encourage diversification of financing sources and make the European economy more resilient.

• stresses that for new firms and for investors seeking greener and digitalised investment opportunities, a well functioning capital market is essential. The EESC therefore calls for further steps toward the completion of the Capital Markets Union (CMU).

• believes that capital markets and private funds can play a crucial role in encouraging the path of companies towards a sustainable greener and digitalised economy. Any policy action by the European legislator concerning taxation, company law and corporate governance should enhance such a role.

• encourages the European Commission to undertake concrete initiatives to establish similar carbon taxes in the Member States in order to harmonise the efforts to achieve an effective reduction of CO2 levels. An ideal outcome would create uniform conditions across the EU single market with regard to the emissions/reductions to be taxed, as well as the specific methods and rates of taxation for equal impact on the level of CO2 in the atmosphere.

• underlines the need for a universal agreement on, and globally coordinated implementation of, the OECD/G20 tax package. In order to promote digitalisation of the European economy, it is important that unilateral rules in Europe do not prevent further adaptation of new business models.