Posted on Nov 29, 2019
Large companies that avoid paying tax became the underlying agenda of the annual Small and Medium Sized Enterprise (SME) Annual Assembly in Helsinki, writes Chris White for EU Today.
The conference focussed on growth and and the greening of Europe but the underlying issue was corporate tax avoidance. In her opening presentation Mariana Mazzucato, Professor in the Economics of Innovation and Public Value at University College London, stated that global companies like Apple and Google are founded on technological innovations originally funded by public finance. “Shouldn’t the the taxpayer get something back?”, brought loud applause.
As one European Commission delegate commented off-the-record: “Small businesses are rooted in their communities and cannot avoid paying their taxes and other charges and it is understandable that they want to see a properly coordinated single market. We shall have to see what the new Commission comes up with but the tax anomalies are matters for the member states.”
But Professor Mazzucato’s comments, reflecting her new book ‘The Value of Everything’, that Ireland and other member states are setting states and countries against each other and that public investment should be entrepreneurial has profound implications for the new Commission.
The focus of the conference was the greening of Europe and the need for small business to meet the challenge and also to grow and to enrich Europe’s economy. Professor Mazzucato also argued for smart growth and better innovation but added that there needs to be a change in Europe’s corporation and government structure. Green technology is a case of government leads business follows. “Don’t make public financing simply handouts”, she said arguing for returns for tax payers.
The message was echoed in the margins by Marco Lombardo Deputy Mayor of the City of Bologna, pictured below beside a poster highlighting his city’s Enterprise Promotion Award, where the public authority have turned the collapse of a large company into a project benefiting public finances.
He explained: “The company which had huge debts was lifted to the Church of Bologna which came to us to appoint a manager. The company is continuing: one part has helped the church, another charity, and the city itself the city to help the homeless and the unemployed to find jobs.
“We pay for learning projects to fit people for jobs and we have made 400 job placements and we have more than 2500 people aspiring to work with 80 of them on target. We have 150 enterprises inside the scheme and they have to take people as qualified for the work not as failures.”
In what he says should be a message to all governments and administrations he explains: “Failure is not a stigma, it is something that happens in life. Failure has to be seen as a device of learning you have to work with people and show them that they are not alone.”
Another aspect of Bologna’s enterprise project is self employment. ”We have financed 22 projects put forward by people seeking to be self employed. One has been helped to open a coffee shop and another an ice cream business.
"The people we help are not a drain on the local economy and they feel they have a role in society. What we have shown is that you do not have to divide between private and public. Even public administrations can be enterprising. We save money in the public purse. The people we help can pay taxes and do not fall into the welfare system,” he added.
He opined that the EU administrations need to be reshaped to become social entrepreneurs but also warned about tax avoidance. “We have to address the problem. We need a common rate of taxes at the EU level and this is very necessary.”
Sabine Soeder head of CoCreative Flow based in the Netherlands also supports common tax standards. “The Commission is at a very special moment. The new Commission wants a new structure with sustainability in the ecosystem. They talk about digitalisation and we have to ask how can a baker use digitalisation? They want regional broad based growth and the question is how can we help SMEs to grow. One SMEs do not want to grow or merge and that is alright but others may and how can we help them.
“Across Europe 90 percent of business are SMEs. There is no single market and SMEs pay high taxes. We need to make it easy to support people who want to be self employed. One thing is to address taxes across Europe so we really have a single market”.
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