The European Commission has abandoned the plans to enforce digital companies, a move that gives victory to the giants of their technology, such as and H.
With the EU and the US in the final phase of the negotiations for a trade agreement, they removed the choice of digital tax from the – supposedly irrelevant – list of proposed taxes to increase revenue during the next seven -year spending program, according to a document released on Friday.
Just a few days before the Budget Plan is presenting, its senior officials are in intensive negotiations to decide which taxes will be included in the Commission’s proposal, which will be published on Wednesday, for the budget that will begin in 2028. It quantifies the revenue that each of them will generate.
Reduce or Movement of Strategy by the EU
The decision against the digital levy will be a significant shift for the EU, which has just proposed taxation of technological giants as a way of repayment of the Union’s debt. The idea referred to a document on the next budget discussed by the 27 EU Commissioners.
This reversal could be an EU strategic move, which is desperately seeking favorable terms for trade with the US. US President Donald Trump threatened with the imposition of Canada as retaliation for the digital taxes it imposed.
Who could be the new EU taxes
The issue of increasing EU taxes has always been sensitive, as national governments are skeptical of giving the Union excessive power to collect money from their voters and excessive autonomy in the way it spends.
The overwhelming majority of EU funds come from governments’ contributions. However, with politicians increasingly demanding Brussels tightening the straps, the committee is looking for new sources of revenue.
According to Friday’s document, instead of digital tax, the Commission wishes to propose three new taxes targeting electric waste, tobacco products and large companies in the EU with a turnover of more than 50 million euros.
The goal is to raise 25 to 30 billion euros a year, which will be used to repay the EU common debt used to finance the recovery after Covid’s pandemic.
At the center of tobacco products
The Commission will propose to impose a single EU level tax on tobacco products, such as cigarettes and cigars. These products are currently taxed by the individual countries, which maintain revenue for themselves.
The idea of the EU comes in the midst of an effort to introduce new taxes into electronic cigarettes and vaporizers, opposed by Italy, Greece and Romania.
Although not opposed to the proposed new taxes, Sweden has said that the transfer of part of its national revenue to the EU is “completely unacceptable”.
The Commission also proposes to tax the dismissed electrical appliances.
The border tax of coal
Wednesday’s proposal is also expected to confirm the 2021 proposals to impose a coal border tax – a popular idea between countries – and to receive a share of revenue from the ETS Trading System (ETS).
This idea is politically sensitive among the countries of Eastern Europe, which are more affected by the ETS.
In a concession to critics, the Commission proposed that only a small part of the ETS revenue will be channeled to the EU budget, while the rest will remain in national governments. He added that a controversial plan for expanding the system to buildings and road transport – known as ETS2, which will enter into force in 2027 – will not be channeled into the EU budget.
National governments should unanimously approve new taxes after two years of intense negotiations, which will begin after the committee’s proposal is submitted.
