DIGITAL TAXATION IN THE EU – THIS TIME, THEY ARE SERIOUS!

A digital tax has always been a topic of discussion at the OECD. However, that’s all it has been: words. It seems EU Commissioner for the Economy Paolo Gentiloni is sick of waiting. Last week, the EU Commission made it clear: failure to adopt an agreement at OECD level by the end of the year means the EU will come up with its own digital tax in 2021. If French Finance Minister Bruno Le Maire has his way, maybe even in the first trimester already! The draft will most probably come together with a law for a global minimum tax, designed to prevent tax havens around the world.

The Commission becoming more active on this topic surprises few; it fits their strategy for a digital sovereign EU. In the current market for digitized products, all actors besides Amazon, Facebook, Google and Apple (The Big Four) do not really have a chance to grow. They lack the resources, which in this case is not only money but also data. In this respect, a digital tax might solve some problems by obliging companies like the aforementioned big four to pay their fair share. However, it wouldn’t change the fact that only they have the access to the most important data needed to be successful in the markets.

URSULA TAKES THE MORAL HIGH GROUND

Earlier this week, Ursula von der Leyen delivered her “State of the European Union” speech in front of the European Parliament in Brussels. Usually this speech takes place in Strasbourg, but moving an entire Parliament across the border to France while also keeping Corona-guidelines was one headache too many for MEPs. During the 79-minute speech, von der Leyen touched on many topics like unity and increased EU powers, but kept circling back to presenting the EU as an entity with high moral standards. For example, she emphasized the need for a “new pact” on migration, one that shares the burden more equally among Member States. She also condemned Polish municipalities for adopting anti-LGBTQI regulations, and promised an anti-racism action plan. When it came to China, von der Leyen slightly pulled her punches, using language that didn’t explicitly condemn China, but rather pointed out “ideological differences.” Would she not be currently occupied with securing a lucrative trade deal with China, her assessment might have been more scathing. It really seemed von der Leyen had thought long and hard over how to give as many factions as possible a little something. Overall, the speech demonstrated von der Leyen’s readiness to put the historic amount of money at her disposal to humane, efficient use.

ALTMAIER: 20 POINTS FOR CLIMATE, AND HOPEFULLY THE POLLS

Last week, German Federal Minister of the Economy Peter Altmaier (CDU) presented a 20-point action plan to implement future climate policy on a “market-economy basis.” The plan itself (full version here), while important, was a lot less interesting than the circumstances surrounding its release. That being said, there were some noteworthy points nonetheless. For starters, climate protection is to become a fixed budget item, with a “certain percentage” of GDP allocated towards the cause every year until 2050. Next, the government is offering investment grants to companies committing themselves to quicker emission reductions than previously planned. Lastly, there will be a comprehensive reform of the German Renewable Energy Sources Act (EEG).

The House’s View

Now, to the interesting part: reading between the lines of the 20 points. Historically speaking, Altmaier and the CDU/CSU have a sub-par track record when it comes to protecting the environment. So why this? Why now? Simply put: 2021 is an election year. Already during the 2019 EU elections, it was clear climate protection is a top priority among German voters. Rival parties like the Greens or the SPD have been on the “right side” of climate protection for decades, and with this move Altmaier tried to signal the CDU/CSU is now finally on board as well. Valiant effort, Mr. Altmaier, but will it be enough to convince voters?

For a Brexit Update (yes, another one…), some background on Belarus and Facebook’s actions against Apple in Europe, check out the PDF: 

• With infrastructure developed by the EU Commission, Germany and five other countries will test whether their Corona tracing apps work across borders. This would enhance traceability, especially in times of vacation, and be a big success for the EU, which often struggles when it comes to tech.
• In her State of the Union speech (see article), Ursula von der Leyen announced a budget of €8 billion to build the next generation of supercomputers. Currently, the EU is already aiming to develop the first supercomputer of the “Exascale” class which would have more than double the computational power of the best supercomputer in the world.
• After we reported several times about the plans for a European cloud infrastructure, this week, 22 companies from Germany and France have signed the founding documents for the non-profit organization “Gaia-X,” located in Brussels. German companies are, among others, BMW, SAP and Siemens.
• The discussions about the pipeline project “North Stream 2” are ongoing in Germany. Chancellor Angela Merkel said that she hadn’t come to a conclusive judgement concerning the project. With only 150 kilometers of pipeline left to build and Russia continuing the construction, we think she probably should do so in the next days.
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State of the Madness

This week our President of the EU-Commission Ursula von der Leyen held her “State of the Union” speech at the EU-Parliament plenary. A good speech! However, it did prove to me that we in Europe are all over the place these days.

(GIF)

She started her speech in French, but switched to English only four sentences in. => French Journalists mad. 

(BTW: German is the most widely-spoken language in the EU, but you don’t see us German-speakers complaining…just saying). 

The speech was supposed to be held in Strasbourg, but due to Corona it was held in Brussels => Macron mad.

Ursula blamed Russia for its “pattern” of “meddling around the world” => Russia mad. 

(Checkmate-ish rebuttal from a Russian politician: “But the West nuked Japan!”) 

Brexit treaty is overdue, but Boris doesn’t want to deliver, she said => Boris Johnson mad. 

Boris tweeted right back at her “they seek to divide us” => Joe Biden mad. 

Joe Biden? Ja! ?‍ Boris Johnson can forget him as a trading partner (should be become President) if the Northern-Ireland border issue is not settled by then (meaning duly organized with an EU-UK Brexit treaty). 

And then Trump said that Austrians “live in the forest” with “forest cities” and “exploding trees” => Austrians mad (or mostly just cracking up)

The REAL State of the Union seems to be: There’s no union at all!  

However, there is one way we stand as one: United we’re mad.