SAU, Alm.del - 2016-17 - Bilag 29: Formandsskabets opsummering fra interparlamentarisk konference om stabilitet, økonomisk koordinering og governance i EU, afholdt den 17.-18. oktober i Bratislava, Slovakiet

Skatteudvalget 2016-17
SAU Alm.del Bilag 29
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INTERPARLIAMENTARY CONFERENCE ON STABILITY,

ECONOMIC COORDINATION AND GOVERNANCE IN THE

EUROPEAN UNION

16 – 18 OCTOBER 2016, BRATISLAVA

Presidency summary

Monday, 17 October 2016

Opening session of the Conference

Welcome address

by Mr

Andrej HRNČIAR

Deputy Speaker of the National Council of the

Slovak Republic

The Deputy Speaker of the National Council

of the Slovak Republic has opened the

Conference with his first speech. He

experessed a great honor, on behalf of the

National Council of the Slovak Republic as

the Deputy Speaker, to be able to intercede

and to inaugurate one of the most important

events of the parliamentary dimension of the

first Slovak Presidency of the Council of the

European Union - the Interparliamentary

Conference

Stability,

Economic

Coordination and Governance in the

European Union. He warmly welcomed

guests on the ground of the National Council

of the Slovak Republic, in Bratislava, the

capital of our country, in the renovated

premises of Bratislava Castle. Then he introduced the Slovak Presidency of the Council of

the European Union, which came at a time when the European Union as such, finds itself in

an unprecedented situation. He also pointed out the outcome of the referendum on Britain's

membership in the European Union which put the Slovak Republic before a new challenge

– to deal with the departure of a member country of the European Community for the first

time in its history. The result of the British referendum is a challenge for us, but also a

moment that requires urgent internal self-reflection in the European Union. He stated that

we are at historical crossroads of the European integration. He believes that EU has basically

only two options now, either to continue the fragmentation or rally towards a greater

cohesion, to unity. For him, today we need unity more than ever. Today, we need a better

and clearer European Union for the European citizens. On the ground of his personal

experience as the Deputy Speaker of the National Council of the Slovak Republic, he allowed

himself to say that we are failing - we are failing at not being able to adequately bring positive

benefits of the common European project to our citizens.

SAU, Alm.del - 2016-17 - Bilag 29: Formandsskabets opsummering fra interparlamentarisk konference om stabilitet, økonomisk koordinering og governance i EU, afholdt den 17.-18. oktober i Bratislava, Slovakiet

For him that's why we need a Union which brings sustainable solutions; a Union, which

delivers tangible results, in terms of real benefits for the economy and its citizens; a Union,

which is capable and prepared to increase the standard of living and social standards of its

citizens, we need a Union, which is united, coherent, legislative, credible and resistant to

internal and external challenges; a Union, which is functional, sets ambitious goals, and is

ready to fulfill them without delay; a Union, which strictly follows the rules and principles

of its functioning; a Union, which has a long-term vision and perspective. The circumstances

and the nature of this difficult crisis period leads us to a common contribution so the

European Union moves from the permanent crisis management to a systematic fulfillment

of its strategic vision. He continued that as a relatively small member state in Europe, we

have set an ambitious goal since the beginning of our Presidency – and that is, to bring the

European Union new energy and take it forward. Today, he is convinced and that is why he

can say without any doubt, that we are successfully and gradually fulfilling this goal. This

conference brought many challenging and meaningful negotiations. He believed, that the

conference has reflected the current European issues in the economic and financial areas, as

well as the challenges that the European Union and its Member States are currently facing.

He emphasized in this context, that the Slovak Republic is, and will also remain in any

European debate; as it always has been so far; a responsible, transparent, predictable and

strong partner, and during our Presidency, also a honest intermediary. The Deputy Speaker

finally appreciated the confidence the guests have placed to the SK PRES.

Introductory remarks

by Mr

Ladislav

KAMENICKÝ

Chair of the Financial and Budgetary Committee of the

National Council of the Slovak Republic

The Chair of the Financial and Budgetary

Committee of the National Council of the Slovak

Republic began his opening speech - as the host of

the Interparliamentary Conference and has

welcomed the guests in Slovakia and in Bratislava,

which, under the Slovak Presidency of the Council

of the European Union is the Centre of the

European interest. He then emphasized, that the

Union is facing a number of crises simultaneously.

The crisis of confidence is one of them. Therefore,

one of the fundamental objectives of the Slovak

Presidency of the Council of the European Union,

not only in the context of the negative outcome of

the referendum on the UK membership in the

European Union, is to strengthen the citizens'

confidence in the European project. According his point of view, the consequences of the

financial and economic crisis and the uncertainty in the social sphere are in fact still very

noticeable. Economies of EU member states are growing very slowly, and the number of

people, especially the young ones, who cannot find a fulltime job, is still very high. The

persistent unemployment and social injustice are the challenges, EU faces together. He

stressed that it is essential to work together to find fair solutions.

The Slovak Presidency of the Council of the European Union has set four main priorities in

its program. The priorities of the Slovak Republic are the Modern single market, which

includes the project of Energy Union and the concept of a Digital single market, in addition

to the Sustainable immigration and asylum policy, based on a comprehensive and

sustainable solution to the immigration crisis and also a Globally engaged Europe, as well

as an Economically strong Europe, which will be addressed prior at the conference. He

pointed out, if we want to live in a prosperous Europe, we need to maintain and strengthen

the European social model, despite the pressure of economic globalization. We must fight

together at European level against tax evasion in order to finance this unique model. It is

necessary to discuss next steps of the fiscal pillar of the EMU together, in particular with

regards to developing common macroeconomic stabilisation tools. An Unemployment

Insurance Scheme for the Euro Area is exactly such a tool. Last but not least, based on the

European Fund for Strategic Investments, we need a common investment program of the

European Union, which should serve as a tool for macroeconomic stabilisation at the time

of symmetric shocks. The Chair continued by introducing each panel of the conference.

The first topic was

The strengthening of the social dimension of the Economic and Monetary Union.

The Economic and Monetary Union currently still remains an unfinished project, so he

believed that strengthening the European pillar of social rights as part of the deepening of

the Economic and Monetary Union will lead to a better management of economic shocks

with negative social consequences, and will also contribute to better performance and

stability of the European economy and significantly strengthen the citizens' confidence in the

European project. He stated that it is therefore urgent to improve the coordination of

employment and social policy, and at the same time fully respect the national competences,

and the role of the social partners and social dialogue. Ms Marianne Thyssen, The European

Commissioner for Employment, Social Affairs, Skills and Labour Mobility held the keynote

speech about the Strengthening of the social dimension of the Economic and Monetary

Union.

The second topic of the conference was

the Fight against Tax Evasion in the European Union,

one of the priority areas of the Work Programme of the European Commission for 2016, but

also one of the priorities of the Slovak Presidency. The fight against tax evasion, tax

avoidance and aggressive tax planning was, and will remain a European priority, but it is

very important to strive to make it a global priority. He showed his conviction that the fight

against tax avoidance of legal entities is as part of the effort, that will lead to fair and effective

taxation in the European Union, and that these efforts will contribute to the stabilisation of

the economic and tax environment, and to a greater transparency in the business sector. On

this matter, the renowned expert on taxes, Professor Prem Sikka from UK, held his speech

as the keynote speaker.

The third topic of the conference was called

Automatic Stabilisers as a Building Block of the Fiscal

Union Architecture.

Our goal was to focus on the issue of building a fiscal pillar of Economic

and Monetary Union and in particular to launch a debate about the possibility of European

stabilisation instruments such as the European Unemployment Insurance System, which in

the future could help cushion the negative impact of economic fluctuations in Europe. The

keynote speaker on this subjectwas the Professor of Economics of the Corvinus University

of Budapest and the former European Commissioner for Employment, Social Affairs and

Inclusion – Mr. László Andor.

The fourth and final topic of the conference plenary session was

The Common Investment

Programme as a tool for Macroeconomic Stabilisation in the European Union,

based on the fact that

the European Union and its Member States need to continue their efforts to boost investment

in the European area.

According the Chair, a favourable investment and business environment is crucial for the

development and implementation of the uniting European projects. These are the key pillars

of a modern single market and Economic and Monetary Union. On this matter he

introduced, Mr. Peter Kažimír, The Minister of Finance of the Slovak Republic and the Chair

of the Economic and Financial Affairs Council who held his presentation as the keynote

speaker. The Chair was pleased to welcome several prominent speakers from the European

Commission, as well as from the relevant committees of the European Parliament, the

national parliaments of the Member States of the European Union, the Slovak Ministry of

Finance, but also a number of renowned speakers from European think-tanks and academia,

at the conference. Finally, he reminded, that the main impetus for the start of the

Interparliamentary conferences organized by the Presiding countries, was in the past the

effort to strengthen the role of national parliaments of EU Member States and the European

Parliament in shaping EU policies in various areas. As national MPs and MEPs elected in

democratic and free elections, we not only have the right, but above all, the responsibility to

participate in shaping the European debate on financial and economic matters, eliminating

the democratic deficit within the decision-making on EU policies. Remember that any

decision concerning European citizens and their lives, requires democratic legitimacy. So he

emphasized that it is therefore necessary to understand each other, communicate, create

platforms for cooperation, build constructive and effective dialogue and find common,

consensual and the best possible solutions that contribute to improving the economic and

monetary situation in the European Union, and thus improve the lives of people in our

European community.

Introductory contribution

by Mr

Igor KOSÍR

Professor of International Relations at the Faculty of Political

Sciences and International Relations at Matej Bel University

in Banská Bystrica

Mr Igor Kosír

has addressed the issue of

Topical

Challenges of European Integration

in his introductory

speech. For him, there are Global competitiveness

challenges for the EU that are a new Kondratieff long

wave of economic civilisation development. From the

"EU Lisbon strategy" to "Europe 2020" strategy, that he

considers unsuccessful, we are on crossroads. He

believes that the new business model represents the 4th

Industrial revolution that the civilization has never

experienced before. He stated that in todays` situation,

when billions of people can be connected via mobile

phones and other technological connections, robotics,

3D printing, quantum technology etc., it is a dramatic

technological revolution. A revolution in the way we

communicate also prevails in the social sphere.

All stakeholders have the responsibility to work together, to better understand the emerging

challenges. He pointed out that the focus on the young generation is a significant challenge

for the EU. The Global coordinating group has 4 representing Member States. EU should

find opportunities how to enhance its competitiveness. He stated that the dynamics of China

and other relatively new Coordination Group BRICS are new partners for the EU, but also

its competitors. He provided the information about the recent BRICS summit in Goa, that

was dedicated to global challenges. Then he continued with China´s ”211“and “985“projects

in science, technology and education sectors. He also declared, that since October 2016, the

RMB, a part of the currencies´ basket of IMF SDR unit, became the 5th global reserve

currency. Mr Kosír continued his speech with the focus on Brexit challenges for EU27. He

raised a questions of a soft or a hard form of Brexit. Is the Global Britain a bridge between

EU and the USA? Finally, he highlighted that at this point, the only real alternative of hard

BREXIT is NO BREXIT. Mr Kosír then focused his speech on the EU and central Africa

cooperation and on security challenges, such as terrorism, radicalism etc. EU must fight these

and to be able to do so, it needs a strong support from the EU citizens, which after all is also

very important for the EU integration. He also highlighted the position of the Union for the

Mediterranean revitalization within the context of the refugees’ crisis. He finished his speech

by emphasising the strengthening of the fiscal union and other stabilizers and development

steps that are needed, as well as other projects.

Session 1: Strengthening the Social Dimension of the EMU

Chaired

by Mr

Ladislav KAMENICKÝ

Chair of the Financial and Budgetary Committee of the National Council of the Slovak Republic

The Chair welcomed and introduced the moderator of the first Session, Mr �½uboš BLAHA

and the speakers.

Moderated

by Mr

�½uboš BLAHA

Chair of the European Affairs Committee of the National

Council of the Slovak Republic

In his introductory speech, the moderator of the first

Session,

Mr �½uboš Blaha,

has stated, that the EU

needs to stop the inside race and that it should help

the countries with the greatest poverty. For example,

the people from the East have to travel and move to

the West, to find a job and the Westerners express

their frustration because those from the East take

their job opportunities. He stressed, that if we do not

act, the euroscepsis will be on the rise. A real solution

for the EU cannot be one-sided and cannot harm the

interests of other countries and we cannot have a

solution that creates losers and winners. Then the

Moderator introduced the panelists.

Keynote speech

by Ms

Marianne THYSSEN

European Commissioner for Employment, Social

Affairs, Skills and Labour Mobility

The first panel was opened by the keynote

speaker

Ms Marianne Thyssen.

At the

beginning, she inducted that EMU was

designed with a centralised monetary policy

but decentralised fiscal, economic and financial

stability policies. Its construction rested on

three convictions: first, the synchronisation of

business cycles in the euro area; second, a

sufficiently flexible and competitive internal

market; and third, the existence of sufficient

‘shock-absorbers’ to deal with country specific

developments. For her, economic and social

interests should not be seen as something that

should be discarded, but what helps attain

economic growth. There is also need for

digialization. At her point of view, the

prolonged crisis revealed the limits of EMU

architecture. While progress has been made, the strengthening the social dimension of EMU

is necessary for its resilience and democratic legitimacy. In March 2016 the Commission

launched a wide ranging consultation on the European Pillar of Social Rights. She pointed

out that structural reforms should get back people into the labor market and prevent and

reduce risks during the working life of people. We have reached pre-crisis employment

levels, but there is still a lot to be done. So she asked, is the social market economy model

that served us so well in the past, apt for the challenges of the future? Could the principles

outlined in the Pillar become a framework for upward convergence? In this context, one

strand of the consultation focuses on how the pillar could be used to strengthen the social

dimension in order to ensure the resilience of EMU. The Commissioner will elaborate on

current Commission initiatives to move in this direction. Then Ms Commissioner continued

with a social divergence. The crisis has shown that convergence in the Eurozone area is weak

and possibly unsustainable, crisis has left a worrying message to us. We saw a lot of shocks

during the crisis. For a resistant labor market, the most important is the balance between

flexibility and security. When a crisis fully breaks out it became clear which Member State

was hit more of that and which less, so that which member state invested more to human

resources. She declared that Economic and Monetary Union remains incomplete and the

Report of five Presidents presented how to complete it in the coming years, the reforms

necessary for increasing convergence upward would improve the entire internal market. All

Member States are invited to the project of a common monetary union. Social pillar seeks to

achieve convergence up, there is a need to strengthen protection capacities. She highlighted

that this is what we mean by better resistance, for example flexible labor market, adequate

support, protection and portability of social rights, reinforcement of social justice, challenges

to create a social policy responding to the new forms of work and reduce divergence, and

response to the arrival of migrants. Implementation tools will be presented to Commission

during the 2017. Finally, she summarized that it must be ensured that labor markets

are resistant and prepared for potential shocks. The pillar of social pillar rights must

ensure a better balance between rights and obligations of employees and employers.

Address

by Ms

Maria João RODRIGUES

Member of the Committee on Employment and Social Affairs,

European Parliament

Ms Maria João Rodrigues

focused her speech on a

strong European Pillar of Social Rights – key element of

the March 2017 roadmap for the EU's future. The long

Eurozone crisis has clearly shown that Europe's

Economic and Monetary Union needs to be completed

with instruments that can mitigate economic shocks and

reduce their social impact. Moreover, European

economic governance needs to be re-balanced to take

into account social indicators properly and ensure that

our currency union works as a machine for sustained

upward convergence instead of contributing to

inequalities within and between countries. She then

stated that the stakes have become even higher in view

of the refugee emergency, increased security threats and

the result of the UK referendum. Faced with a

widespread resurgence of nationalistic right-wing

forces, the EU must urgently and convincingly reassure citizens that it can provide socio-

economic security and good life prospects for all. She stressed the European Pillar of Social

Rights, on which the Commission is expected to make a proposal in March 2017, will

therefore be the most important element of the roadmap which EU27 leaders are expected

to adopt at the summit celebrating the 60th anniversary of the Rome Treaties. The challenge

reaches well beyond the Eurozone, and EU27 leaders cannot afford to disappoint anymore.

Ms Rodrigues then underlined that illusory promises of nationalists need to be countered

with effective European solutions. Citizens will only be able to keep control over their lives

in a well-regulated Single Market and a Monetary Union which protects them against socio-

economic risks of the 21st century. The European Pillar of Social Rights should set out

updated social standards, including legislation ensuring fair working conditions for all

forms of employment, but it must be also backed up by the means to uphold these standards

in practice. Stronger and better targeted European investment tools are needed, coupled

with adequate budgetary flexibility for social investments at national level. Moreover, the

specific needs of the Eurozone must finally be addressed through the creation of a fiscal

capacity enabling to restore structural convergence through a mix of investments and

socially sensitive reforms, and establishing an insurance mechanism for short-term support

to countries undergoing cyclical downturns.

Address

by Mr

Michael SMYTH

Vice-President of the European Economic and Social

Committee

The Vice-President of the European Economic and

Social Committee has declared, at the beginning of

his speech, that they have been very actively

involved in the European debate on the EMU.

Bringing prosperity back to the European people

and companies are, and will remain, their highest

priorities. The European Economic and Social

Committee wants to see a more effective and

democratic, economic and social governance,

notably in the euro area. Then he presented the 4

pillars in which the EESC proposed the completion

of EMU - themonetary and the financial pillar, the

economic pillar, the social pillar and the political

pillar. Mr Smyth underlined that for completion,

the Union cannot ignore the social consequences of

the current economic policies by leaving them

entirely up to individual countries. It is impossible

to ensure the stability of EMU without any social mechanisms for the euro area that can deal

with the consequences of severe shocks or imbalances. Urgent structural reforms are needed.

However, the European Pillar of Social Rights can be a positive project for Europe and its

citizens. It offers the opportunity to demonstrate that the European level is still able to

provide a suitable response to the challenges and opportunities presented by digitalisation,

new technologies and new forms of employment. The Vice-President highlighted that an

effective social dialogue at national and European level will help meetthe challenges facing

the world of work and economic growth and well-functioning social protection systems are

mutually reinforcing. He expressed his hope that the social dialogue will provide the

necessary results that the best way how to face a crisis, is a good social protection. There is a

need for change of paradigm, creating more jobs and more efficient implementation

of expenditure. The crisis itself has made it apparent that a paradigm shift is required to

move from short-term austerity policies towards a longer term social investment strategy.

Member States should thus commit themselves to social investment and involve all relevant

actors in this project. Finally, he emphasized that if we want to restore the EU, we must act

quickly and together on the fiscal, economic, employment and social fronts. After all, the

European Social Model is based on the common understanding that productivity and

wealth must equally benefit all citizens.

Address

by Mr

Zsolt DARVAS

Senior Fellow at Bruegel (Brussels); Research Fellow at

the Institute of Economics of the Hungarian Academy

of Sciences; Associate Professor at the Corvinus

University of Budapest

At the beginning of his speech,

Mr Darvas,

has

reminded of the so called “six pack”, which

should solve the macroeconomic indicators. The

additional package of the indicators was

presented later, on the basis of the Report of five

Presidents, also other indicators were presented,

e.g. a number of people wanting to work within

the working population, a number of long-term

unemployed and young unemployed. This

report deals with 3 indicators (whilst there is no

indicator of income inequality). In this context,

Mr Darvas has asked, are the indicators useful?

He beleives they are, especially for the well-being

of individuals and for the makroeconomic

prospects. He welcomes the initiative of the new Commission. Mr Darvas then raised

another question, are these indicators sufficient? He repeated that there is a lack of indicator

of income inequality. The Commission considers this indicator as important but does not

include it in its report. The MMF published a lot of articles, which argue that as unequal is

the society in a given country, that much unstable is the country in macroeconomic

prospects. Countries with higher inequality are facing higher unemployment. Then he

turned his speech to BREXIT and presented several factors that supported the BREXIT. He

mentioned that is involved in a research on BREXIT. He stated that the most votes for

BREXIT were in the regions with the highest inequality. He continued that there should be

a more active social framework and there is a need for more European instruments and

therefore he agreed with Ms Rodrigues regarding this issue. At the end, he stated that in the

process of macroeconomic imbalancesonly have informative nature, if they do not lead to

concrete steps, they will also not lead to improvement.

Session 2: Fight against Tax Evasion in the EU

Chaired

by Mr

Ladislav KAMENICKÝ

Chair of the Financial and Budgetary Committee of the National

Council of the Slovak Republic

Mr Chair introduced the panelist.

Moderated

by Ms

Dana MEAGER

State Secretary of the Ministry of Finance of the Slovak Republic

The second panel was chaired by

Ms Dana Meager,

the

State Secretary of the Ministry of Finance of the Slovak

Republic. In the introductory word, she drew her attention

to the necessity of a more effectively fight against tax

evasion. In this sense, for instance Slovakia can rely on the

2012 plan, although it does not mean that there are already

not reserves in this field. Moreover, the fight's effectivity

does not rest in plans only. It rests also in the interchange of

information in the European Union, as well as behind its

borders, as clearly showed by the Ukrainian case.

Keynote speech

Mr Prem SIKKA

Professor of Accounting and Director of the Centre for Global

Accountability at the University of Essex, UK

Professor Prem Sikka,

University of Essex, UK,

explained the destructive role of the tax avoidance

industry in designing, selling and implementing tax

avoidance schemes. This industry is highly lucrative and

primarily resides in the offices of the Big Four

accountancy firms. They have easy access to senior

management to sell avoidance schemes. Then the same

firms pretend to report independently audit the tax

calculations. The firms also act as advisors to numerous

government departments and offer jobs to past and

potential ministers. In the UK, on a number of occasions

the courts have declared tax avoidance schemes designed

by the Big Four firms to be unlawful. Despite that no firm

has ever been investigated, prosecuted or fined. Despite

boasting codes of ethics, no accountancy firm has ever

been disciplined by any professional body for selling

unlawful tax avoidance schemes. The position in the rest

of the European Union is no different. Whilst the European Union has made some progress

in tackling tax avoidance through a possible blacklisting of tax havens, country-by-country-

reporting, Common Consolidated Corporate Tax Base (CCCTB) and scrutiny of the abuse

of tax rules for state-aid. However, there has been little focus on the tax avoidance industry.

Address

by Mr

Bernardus ZUIJDENDORP

Head of Unit Company Taxation Initiatives, Directorate-

General for Taxation and Customs Union, European

Commission

In his presentation

Mr Bernardus Zuijdendorp,

Head

of Unit Company Taxation Initiatives, Directorate-

General for Taxation and Customs Union, European

Commission, gave an overview of the recent and

forthcoming the European Commission's initiatives on

tax transparency and the fight against tax avoidance.

These initiatives include the January 2016 Anti-Tax

Avoidance Package and Jun 2016 Commission's Action

Plan consists of five key targets: Re-launching the

CCCTB, ensuring fair taxation where profits are

generated, creating a better business environment,

increasing transparency and improving the European

Union's coordination. Mr Zuijdendorp also focused his

presentation on work towards establishing a common

European Union's list of third countries and

jurisdictions, the follow-up to the Panama Papers and the forthcoming package on "Building

a fair, competitive and stable corporate tax system for the EU' which the European

Commission will adopt in the coming weeks.

Address

by Mr

Richard MURPHY

Professor of Practice in International Political Economy at City

University London; Director of Tax Research, UK

According to

Mr Richard Murphy,

Professor of Practice

in International Political Economy and Director, Tax

Research UK, we are losing estimatelly at least €1 trillion

of loss across the European Union to the tax gap, excluding

unpaid tax. As he further showed more than €800 billion

of this may be evasion. The vast majority of the loss is

domestic. In this context Mr Murphy pointed out the UK

case where only 1.3 million companies of 3.5 million

registered pays taxes. Next 400 thousand even do not

submit a VAT return. The tax penalties are a specific

chapter. Either, they are not awarded or there are

unreasonably low. Nevertheless, there are steps to take to

effectively solve this situation like a drastic improving tax

gap estimation methodology, practice and publication

intervals, a developing technical solutions to tackling

domestic tax evasion, an automatic information exchange,

beneficial ownership and more. Beside that the success in

our fight, as Mr Murphy stressed, lies on high quality tax

gap data so that scarce resources are used to the best effect.

Address

by Mr

Fabio DE MASI

Vice-Chair of the Committee of Inquiry to investigate

alleged contraventions and maladministration in the

application of Union law in relation to money laundering,

tax avoidance and tax evasion; Member of the Committee on

Economic and Monetary Affairs, European Parliament

In the beginning of his contribution,

Mr Fabio De

Masi,

Member of the Special Committee on Tax

Rulings and Other Measures Similar in Nature or

Effect; Member of the Committee on Economic and

Monetary Affairs, European Parliament, pointed out

the danger arising from a divided society. Behind it

stays a high unemployment rate, austerity and the

feeling of citizens, that not all of us are equal before the

law. The mentioned situation is a risk for democracy,

as well as for the European institutions, whereas in its

light, the institutions are losing trust. In Mr De Masi's

opinion, the aim to intensify the fight against tax

evasion, through which terrorism can be financed too,

is undoubtedly right. However, at the same time, it brings us to grips with a number of

complex problems. One of themis the fact, that along a single market, 28 different tax

approaches exist in the EU. The solution here would lie in a common tax base and also in the

stronger frame of state help in tax collection. Mr De Masi called for a greater strictness

towards transnational companies. "We should not fear to launch threats with transition from

double no taxation to double taxation", he declared. In his opinion, one should look for a

solution of the administration problems in its low capabilities for checking faster and faster

and also bulkier and bulkier transactions. Mr De Masi also clearly made a stand for a

significant increase of transparency, toughening of sanctions for banks breaking the law and

for legislative for a statiting a clear ownership of companys. In conclusion, he thanked the

people working for Wikileaks and Panamapapers and expressed his favour of their better

protection.

In her short comment, the chair of the second panel,

Ms Meager,

has stressed the importance

of the regional particularities, for which we can not only think about solution at the Union

level. In

the discussion that followed,

a majority of the speakers agreed with the necessity

of a common, more united approach in the fight against tax evasion. In these terms, they

raised an inevitability of the strengthening of the transparency, and also experessed a

positive attitude towards the legislative proposals for providing a clear identification

company owners and welcomed the European Commission's idea to re-launched CCCTB.

Tuesday, 18 October 2016

Session 3: Automatic Stabilisers as a Building Block of the Fiscal Union

Architecture

Chaired

by Mr

Ladislav KAMENICKÝ

Chair of the Financial and Budgetary Committee of the

National Council of the Slovak Republic

The Chair welcomed and introduced the

moderator of the third Session, Mr Ivan Šramko

and the speakers.

Moderated

by Mr

Ivan ŠRAMKO

Chair of the Council for Budget Responsibility

In his introductory speech,

Mr Šramko

has stated

that Europe went through very hard times already

from the beginning of the crisis in the 2008, e.g. the

GDP lapsed, unemployment rate has increased.

After describing the times of crisis, he introduced

each speaker.

Keynote speech

by Mr

László ANDOR

Professor at the Economics Department at the

Corvinus University of Budapest; European

Commissioner for Employment, Social Affairs and

Inclusion (2010-2014)

The Professor started his speech with a

position that National parliaments should

continue to play a key role in sustainability

and economic cohesion. When Europe’s crisis

is mentioned today, people most likely

associate it with the so-called refugee crisis,

and the need to manage Brexit. For him, the

European Union was already unstable before

the 2015 refugee wave arrived and the

decision of a major Member State to hold a

referendum

about

continued

membership. He then declared that in June

2015, the Eurozone was diagnosed with

serious divergence by the Five Presidents’

Report. Indeed, the divergence that has

developed within the euro area between core and periphery, is the main threat to the

existence of the single currency and to the stability of the EU as a whole. Hence, there is a

need for further strengthening of the EMU architecture, and in particular to strengthen its

real economic performance and its social dimension. He stated that, this ambition should go

beyond securing the short-term survival of the single currency, which was the pattern in the

2011-3 period. Without an improvement in real economic and social outcomes, rising

nationalist sentiment will continue to turn against either the single currency, or the EU, or

both. The democratic governability in Southern Europe is at stake. At his point of view,

rebalancing the Eurozone is a key question. Various models of rule-based, though limited

mechanism of solidarity have already been explored by think tanks, in order to strengthen

people’s and markets’ confidence in the euro, and thus create a better institutional

foundation for the recovery of investment. Hostility around bail-out programs and their

conditionality have not created a good atmosphere in which more solidarity could be easily

promoted, especially if it involves various forms of fiscal transfers. However, there is

virtually no serious assessment of the functioning of the euro which would see a chance of

long life without a fiscal capacity and risk sharing, ideally in some form of automatic

stabilizers that can limit the damage from cyclical downturns. For him, unemployment

insurance (or re-insurance) is a welldeveloped option for such a function and fiscal capacity

is far from being the only issue awaiting debate and answers. Mr Andor then asked, should

we see the IMF as a permanent participant of EMU stabilization, or we will reach a point

soon when the Fund is not needed any longer as a lender or an analyst of debt sustainability?

Can the ECB be defended from constant legal challenges when it acts in defense of the

integrity of the single currency? Can we find the right balance between external support and

national responsibility (and bankruptcy if needed) without the risk of contagion and

disintegration? He added while these and many other questions are raised in connection

with EMU deepening, it should not be forgotten that not even the Banking Union has been

completed (deposit insurance needs to be delivered to complete the three-pillar system). At

the same time, there should be a way to better articulate economic policy in the interest of

the euro area as a whole, in order to optimize policy coordination for growth together. In his

view, member states should not be allowed to pursue arbitrary targets (e.g. “black zero”), or

accumulate excessive current account surpluses, if those are detrimental to the community

as a whole. Establishing a chief economist has been considered for some time, but concrete

steps have proven just too difficult, similarly to the external representation of the euro. Mr

Andor continued his speech with a question of automatic stabilisers. Automatic stabilisers

offer the solution to counter „asymmetric shocks” and resulting imbalances by having a rule-

based and conditional mechanism of temporary fiscal transfers. He introduced in

discussions on Eurozone fiscal capacity, which are now more frequent than 5-6 years before,

experts speak about three possible models of automatic stabilisers. He introduced a solution

that would be in conformity with the current Treaty, but it also has disadvantages. The

output gap is a concept too abstract for many people, and when it is calculated, it is often

corrected ex post, which risks leading to perverse outcomes. He continued in addition, it

entirely lacks a social focus (i.e. it is not certain at all that the beneficiaries of such transfers

would be the more vulnerable victims of economic crises). Reinsurance of national

unemployment insurance funds is another possibility. The national capacity of dealing with

cyclical unemployment would be supported, but transfers would only be triggered by major

crises. Such a scheme would make a stronger and more visible impact at times of crisis, while

lacking a role in case of more modest fluctuations. He highlighted that the reinsurance model

involves some risk which is related to the possibility to set the trigger too high (in terms of

rising unemployment above „standard” levels), and thus making the model less effective

than potentially possible. Finally, a partial pooling of unemployment benefit systems would

make an economically more advanced solution, by also defining some common minimum

standards accross countries (in terms of minimum replacement ratio and duration). The

minimum would not be a maximum, because member states could top up payments from

the common pool and also extend coverage from their own resources. But the common pool

would already have a significant stabilisation effect and it would represent EU solidarity in

countries experiencing temporary hardships do to the limitations of their macroeconomic

toolbox in the monetary union. He explained, such insurance mechanisms existed in the

EMU since the times of 1999, the establishment of the single currency, all member states

would have been beneficiaries for a shorter or longer period. Countries experiencing a severe

recession would have received fiscal transfers amounting to 0,5-1 per cent of their GDP,

helping them to a faster recovery and ending up with less poverty and income inequality for

which the EU or the euro are blamed today.

Address

by Mr

Marco BUTI

Director-General at the Directorate-General for

Economic and Financial Affairs at the European

Commission

At the beginning of his speech,

Mr Buti

criticized a

weak political will to deal with the completion of

economic and monetary union. He said one way

would be to say forget about it and let's go back to it

in 12 months. But this will be a basic mistake. He

continued that it is necessary to provide new EU

public goods related to the fight against terrorism

and migration. There should also be loud request of

the European parliament and national parliaments

to put pressure on the governments for completion

of economic and monetary union. He stated that

economics is looking at the automatic stabilisers

very positively, but they are not perfect on the

national level, even if they are prompt and

independent from the political will. They are

coming after some major event (such as decrease of employment). Automatic stabilisers go

hand in hand with the structure of tax and size of the expenditure. He explained that

automatic stabilisers are also related to the Insurance system, but still are not optimal either

with connection to the economic and monetary union. Mr Buti continued with his

presentation. Fiscal capacity on the level of EFSI is the instrument for solving symmetric

shocks. It is necessary to count with public stabilization and with the stabilization of the

private sector (by stabilizing the public sector etc.). In his approach, stabilization of

publicsector only in case of serious shocks, a strict fiscal dispcipline must be ensured, it

should be automatic to avoid political decisions. He highlighted that countries should be

aware of that, the more we do in sharing of private risk, the more we reduce the pressure on

shared public risk. Among economists and in the political field, there is clear consensus of

that European banks were allowed to cross and pushed to unorthodox policies.

Address

by Ms

Pervenche BERÈS

Member of the Committee on Economic and Monetary

Affairs, European Parliament

Ms Berés

focused in her speech on budget, fiscal

union and stabilisers. She explained why fiscal

union was not completed. It is because of French

engine tiredness, British influence, mistake in

adopting euro by other countires, more countries

should adopt euro in accordance with clear

criterias. The Five Presidents’ Report states that it

is necessary to complete the project of economic

union. She continued that it is necessary to wait

how the situation will develop after elections, on

the other hand BREXIT did not wait. Now it is

important to strengthen the role and the

relationship between EP and national parliaments.

To be able to complete the Eurozone it is necessary

to be supplemented by the relevant level of

compensation that does not exist at the national

level. She stated that automatic stabilisers have

advantages at the national level, showing citizens that there is some confidence in the euro

area, even when citizens do not see it directly. The question of unemployment is going to be

an essential question for Eurozone. At the end, she expressed d her belief that the work on

the White book will be brave.

Address

by Mr

Jean ARTHUIS

Chair of the Committee on Budgets, European

Parliament

Mr Arthuis

focused his speech on the

stability pact and growth. The Chair began his

speech with stating that the term of automatic

stabilsers is kind of an esoteric title, but it is still

an absolutely necessary topic. When talking

about the budget of the eurozone, there are

dysfunctionalities and the euro can not be

fruitful in all areas. For him, there is a slight

pressure on the application of budgetary

discipline in the EU - there is no government,

the European Commission has neither the

authority nor the means - there is a

conditionality, but we do not know whether it

is democratic. At his point of view, we are at

the end of one cycle, what has been shown by

BREXIT, so that citizens are no longer

concerned about the joint project, nostalgia for national currencies increased by 10%. Then

he asked, how should the EU budget look? In the fiscal capacity, we have to have tools for

stability, which would correspond with symmetric shocks, clearer rules which has to be

respected. For him, in order to have the right tool there is a need of reforms, if there is a deficit

of trust, it is because of doubts about the euro. He highlighted, that we should break this

vicious circle, we need the government and the Minister of Finance without conflict of

interest and we need to harmonize the audit of EU public funds.

Address

by Mr

Michal POLÁK

General Government Counsel, Ministry of Finance of the

Slovak Republic

Mr Polák

stated that the Ministry of Economy of Slovak

Republic is convinced of the need to implement fiscal

rules and apply them equaly. For him, the discussion on

the joint government, the Minister of Finance and the

EU budget is more difficult than the discussion on

insurance or about automatic stabilisers. There is the

issue of distrust because the rules are not respected at

the same level. The fiscal capacity can not become a clear

transfer highway, there may not be just contributors. For

more diversional economies, it is easier to absorb

shocksbut we are small acountry with a less open

economy. Finally, he stated that the question of stability

of the eurozone is the key for the stability of the EU as

a whole, therefore the topic on fiscal capacity was also

the Ecofin Council´s main topic. He believes that the

White Paper will reflect this approach.

Session 4: Common Investment Programme as a Tool for Macroeconomic

Stabilisation in the EU

Moderated

by Ms

Katarína CSÉFALVAYOVÁ

Vice-Chair of the European Affairs Committee of the National

Council of the Slovak Republic

The fourth panel was led by

Mrs Katarína Cséfalvayová,

Vice-Chair of the European Affairs Committee of the

National Council of the Slovak Republic and vice-dean of The

Faculty of International Relations of the University of

Economics in Bratislava. In the introduction, she highlighted

the importance of the conferences' debates. Despite the

discourse pointed out by the difficult problems, she stated

that there still is a reason for an adequate optimism. "We

should not forget the importance of the economic

cooperation on which the European Union stays", she

explained. On the contrary, it is necessary to focus on

developing a positive base and right identification of

adequate instruments to achieve the set objectives.

Keynote speech

by Mr

Peter KA�½IMÍR

Chair of the Economic and Financial Affairs Council

(ECOFIN); Minister of Finance of the Slovak

Republic

Mr Peter Kažimír,

Minister of Finance of

Slovak Republic and President of the ECOFIN

Council, began his contribution by presenting

of the model example that mapped a period

from the robust growth of the Spanish

economy till its fall. Concerning the description

of the particular economic elements and

relations evolvement in a great measure

reminiscent to recent reality, as well as present,

he surprised the deputies by explananing that

the model was already publish in 1998.

Based on the presented example, Mr Kažimír,

has warned against the incompletion of the

European Union's architecture. In his opinion,

this is a reason why we miss elements that are

able to automatically and effectively absorb

economic shocks. The lack of the fiscal management able for instance, to provide common

unemployment insurance, has the same ground. A very similar base from which one could

built the necessary elements to complete the European Union's architecture, is the EFSI and

the ESM. Concerning the EFSI, it still needs a number of modifications, which would lead to

its improving and strengthening. "In this context we should speak about positive

additionality", declared Mr Kažimír. "In the future, the EFSI could be a partner in the large

infrastructural projects, for example. Today it is still problematicbecasuse its insufficient

capacity", he explained. Yet, the member states have few reasons to donor the EFSI from

their budgets, since no country knows how much it will receive back. If the situation will

change and a compromise is found (e.g. guarantee of deposit recovery at least), the amount

of the EFSI will grow as well as the leverage effect. Mr. Kažimír has shown in his

contribution, that the base for economic shocks absorbing instrument does exist, but there is

work to be done. At the same time, he stressed, that it is not a mattter of the point of view,

but a necessity.

Address

by Mr

Roberto GUALTIERI

Chair of the Committee on Economic and Monetary

Affairs, European Parliament

Mr Robert Gualtieri`s

(Chair of the Committee

on Economic and Monetary Affairs, European

Parliament) opinion, the key problem of the EU, and

the last crises confirmed it, lies in the lack of

macroeconomic instruments. The crises also

disclosed an insufficient harmonization of public

investments with implementing the Stability and

Growth Pact rules. If we really want to be

progressing we have to enhance and finalize EMU,

answer a question on how to advocate these

solutions and support political dynamics. We also

have to focus on contemporary instruments and use

them to move towards the right direction. It is

necessary to know too how to use an investment

capability, which is to disposal today and to

understand that it asks for transition from

investment plan to investment strategy. Mr Gualtieri further highlighted the need of a better

cooperation among relevant macroeconomic instruments and the ESIF. Finally, he

concluded that it is necessary to make private investors more visible and to connect them

more efficiently to the single digital and energy market.

Address

by Mr

Gerassimos THOMAS

Chair of the Steering Board of the European Fund

for Strategic Investment; Deputy Director-General

at the Directorate-General for Energy at the

European Commission

Mr Gerassimos Thomas,

Chair of the

Steering Board of the European Fund for

Strategic Investment; Deputy Director-

General at the Directorate-General for Energy

at the European Commission, presented that

the Euro area investment ratio remains

substantially below the pre-crisis average. In

his opinion, behind this situation we should

primarily see a sluggish demand and a low

potential growth via the accelerator channel,

the need for deleveraging and reducing

overcapacity in some countries, a financial

fragmentation, a decline in public investment

in some countries, the high economic and

political uncertainty and the structural and the

regulatory rigidities. Concerning the EFSI, Mr Thomas expressed himself in favour of a long-

term discussion (positive additionality included), however one should realize that a

universal instrument solving all problems does not exist. Moreover, the EFSI is not

conceived as a stabilisation tool and the European Commission has not changed it on

purpose to not jeopardize its continuity till 2020. In conclusion, Mr Thomas supported the

idea of a higher rate of investments risks sharing by private sector to better protect the public

sector.

Address

by Ms

Teresa CAEIRO

Vice-President of the Assembly of the Republic of Portugal

Ms Teresa Caeiro,

Vice-President of the Assembly of

the Republic of Portugal, pointed out the relevance of

the European semester implementation and the sense

of the Fiscal union. As she stressed, "neither the

European Union nor the Eurozone can exist without

the Fiscal union." According to her, the attention has

also to be paid to the balance between decisions at the

European and national levels. "For that reason, we

should speak about integration, taking into account

interests of EU member states", she specified. Beside

effort to real Financial and Tax union, also the social

dimension shell not be neglected. Ms Caeiro expressed

her belief, that the Lisbon treaty offers a solid support

for the required innovative measures. These should

primarily be focused on investment increase, since it is

the strategic element generating growth and

employment. In conclusion, she raised the issue of

more flexible monetary policy.

Address

by Mr

Andrew WATT

Head of the Macroeconomic Policy Institute of the

Hans-Böckler Foundation

In the beginning of his contribution,

Mr Andrew

Watt,

Head of the Macroeconomic Policy

Institute of the Hans-Böckler Foundation,

pointed out the very weak investment in Europe

what he considers to be a serious problem.

According to him, the EFSI does not provide a

good respite and the reform of the European

Union and the Eurozone as such is needed. Here,

the necessity of the larger public investments,

which paradoxically IMF claims about that have

ability to stimulate bigger private investments,

must be taken to the question. Besides that, we

also force to extremely limited European-level

fiscal capacity, weak Cross-border automatic

stabilisation and insufficient Tax policy

coordination.

As a way forward, Mr Watt introduced several ideas; among them to give the ECB the

capacity to buy newly issued EIB bonds, or to take net investment spending out of fiscal

rules. He appealed for close involving of the social partners into the reform process which

has to be particular about balanced growth of the Eurozone. In the end, he again emphasized

the importance of public investments, since, as he explained, the public investments have

the potential to provoke the necessary trust on the private investor part and for that reason

we should not delay their mobilisation. As he stated in conclusion, promising ways out of

the contemporary situation do exist also without re-writing treaties. In the following

discussion, the majority of the delegates positively appraised the EFSI operation and

expressed themselves in favour of its better connectivity with the cohesion policy, in favour

of its higher investment capacity amount and more equable using within the European

Union. The delegates have emphasized the inevitability of effective and immediate growth

and unemployment problem solution, as well as the importance of the balance keeping

among common procedures and the respect of a national sovereignty.

Closing remarks

Address

by Mr

Roberto GUALTIERI

Chair of the Committee on Economic and Monetary

Affairs, European Parliament

In the closing remarks,

Mr Roberto Gualtieri

appraised the conference as an occasion to speak

more about the context then about methodology. In

his words, the event managed to effectively capitalise

the reunion of the European parliament, the

European Commission and the national parliament

deputies, as well as other eminent personalities. He

appreciated the well chosen program, a lesser formal

conference's framework, which gave the

opportunity to concentrate better on more important

questions and to create more space for solid

discussion. In the conclusion, he expressed his

opinion that the high quality contributions uttered at

the conference, will offer a needed dynamic for

launching a political dialogue.