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France, Germany Urge Quick Decision on EU Recovery Package

Posted on June 24, 2020

As the finance ministers of France and Germany pushed EU leaders to decide on the scope of a proposed €750 million coronavirus recovery package, they affirmed their support for digital taxation and corporate minimum taxation.

At a June 22 Franco-German press conference in Berlin, French Finance Minister Bruno Le Maire said EU leaders must reach agreement on the economic recovery package to maximize the efficiency of funds. “It’s time to decide now. We need the money now. And we need to support our economies in all European nations now,” he said.

Talks among EU leaders at the June 19 European Council virtual summit failed to yield agreement on the recovery fund and the €1.1 trillion multi-annual financial framework. Key disagreements saw eastern EU countries demanding changes to the European Commission's proposed own resource based on the emissions trading system, and the so-called Frugal Four (Austria, Denmark, the Netherlands, and Sweden) opposing the majority of grants over loans. Council President Charles Michel said leaders will meet again in mid-July for an in-person summit.

Le Maire said he had worked with German Finance Minister Olaf Scholz to prepare the €500 billion green economic recovery fund proposed by German Chancellor Angela Merkel and French President Emmanuel Macron on May 18, which he called a “positive milestone in the history of European countries.”

Scholz and Le Maire said they want the recovery fund payments to happen between 2020 and 2022 rather than continue into 2024 as some member states have suggested. Le Maire also said he wants to see more integration within the eurozone and more sovereignty at the European level in response to the crisis.

Le Maire said agreements on international taxation will be key to the recovery package, which members of the European Parliament have said they will not approve unless it contains new own resources. Although the United States has withdrawn from talks on reaching a global solution for taxing the digital economy, Scholz said he is still confident that an OECD agreement can be reached by the end of the year, Reuters reported June 22. He did not comment on whether Germany would move forward with its own digital tax if the OECD countries fail to reach an agreement by year’s end.

“We remain strongly committed to success on this question of international taxation by the end of this year at the OECD level on . . . pillar 1 and pillar 2, digital taxation, and minimum taxation for the corporate tax,” Le Maire said at the press conference. “This is the package, and this is the best way of building a fairer and more efficient international taxation system for the 21st century.”

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