THE EU's executive arm will today propose abolishing national vetoes on tax policy - plans which EU governments are almost certain to reject and which could trigger a backlash from populists protesting the encroachment on the sovereignty of member states.
EU decisions on taxation require unanimity among governments, which is often hard to achieve as advocates of low taxation - such as Ireland - oppose policies seen as undermining their economic competitiveness.
The latest victim of the bloc's inability to reach consensus was the so-called 'digital tax' - a plan to introduce a 3pc levy on the European revenue on tech giants such as Amazon and Facebook.
"Unanimity has hampered progress on important tax initiatives needed to strengthen the single market and boost EU competitiveness" while also having a "damaging effect" on wider policies, the European Commission, the bloc's executive arm in Brussels, will say in the draft of a policy document to be unveiled today.
Unanimity "is self-defeating", according to the document obtained by Bloomberg, which cites the tech tax and the financial transactions tax as examples of collective failures to act at a cost of billions for state coffers.
The Commission will propose that EU governments agree to gradually relinquish their national vetoes starting this year with policies that do not have an impact on national taxing rights, such as measures to combat fraud, according to the document. Member states should agree to take decisions by supermajority in more sensitive areas by the end of 2020, said according to the paper.
"The only contribution to tax policy by member states like Ireland, Luxembourg and the Netherlands consists of systematically blocking any sort of progress," said Markus Ferber, a German conservative lawmaker in the European Parliament. Majority voting would be most helpful in closing loopholes and improving the cooperation of tax authorities, he said.
Replacing the so-called qualified-majority vote would need the approval of all EU national governments, and no objections from national parliaments, under Article 48 of the Treaty of the EU, according to the commission document.
Such consensus is unlikely to be reached.
Even though the plan is unlikely to make it into law, it could hand ammunition to nationalist leaders seeking to make inroads in upcoming European Parliament elections and "command by negation", blocking initiatives that could expand the EU's powers.
A Department of Finance spokesman said: "We are yet to see any formal proposal from the Commission. Taxation is a sovereign Member State competence... Ireland does not support any change being made to how tax issues are agreed at EU level."