Crisis Profits Tax - Estimating the Potential Tax Revenue Gains for the EU
The pandemic is far from over. The social and economic consequences will affect people for decades to come. Some businesses have disproportionately benefited from the pandemic. While tens of thousands of brick-and-mortar stores are closed, Amazon sales rise. Facebook traffic is booming. Cloud computing is exploding.
Full study available here.
This is the first study to comprehensively calculate crisis profits (or excess profits) for multinational enterprises (MNEs) with a presence in the EU.
📢The pandemic fuels existing social and economic inequalities.
🧮This is the first study to comprehensively calculate crisis profits for large multinational
corporations with turnovers above $100 million with subsidiaries in the EU.
— The Left in the European Parliament (@Left_EU) November 26, 2021
MEP Manon Aubry (La France Insoumise, France) criticises the unwillingness of those in power to adequately tax the abnormal profits of large corporations:
“In France, we used to have a 50% tax on excess profit during the first world war. With such a tax now, France would be able to raise almost 7 billion Euros. And this could be decided quickly: France is voting on the 2022 budget in December and our group in the French parliament is proposing such a tax by an amendment. The majority just needs to vote for it and it could be implemented directly.
As a society, we cannot allow for a world-devastating event like this pandemic, with all the socio-economic repercussions, to be transformed into a highly profitable moment for a few. In moments of crisis, policy has to adjust fast to reality.”
MEP Martin Schirdewan (DIE LINKE, Germany) underlines that public budgets could benefit massively from a crisis levy on large corporations:
“A tax rate of 70 percent would cover more than one third (38%) of the annual budget of the EU’s “Next Generation EU” reconstruction fund (€723.8 billion over 7 years) and thus make a considerable contribution to crisis management.
Corporations like Lufthansa, adidas, BASF or VW have received billions in state aid, i.e. tax money. We are talking about Dax companies that together hold thousands of shares in tax havens, thus extracting tax money from the country and in return received support from the taxpayer. It is high time that these corporations made their contribution to the crisis.”
MEP José Gusmão (Bloco de Esquerda, Portugal):
“In the past, so-called excess profits taxes have been temporarily introduced in countries such as the USA, Canada, France or Italy.
In 1918, profits exceeding an 8% return on capital were taxed at progressive rates of up to 80%. The pandemic is not a world war and yet its effects are similarly devastating: five million dead so far, entire industries on the brink of collapse, national debt rising immeasurably worldwide.
The crisis has intensified the trend towards market concentration among a few large companies, such as the online shopping giant Amazon, but also internet corporations like Google, Facebook and Microsoft. While smaller, less digitised competing companies are being severely battered by the crisis, the large multinational digital corporations are expanding their monopoly positions, which are harmful to the economy as a whole. This alone requires an instrument to mitigate this effect.”
Excess Profits Tax Estimating the Potential - Tax Revenue Gains for the European UnionEN