Deputy leaders of the centre-left SDP party, Sinisa Hajdas-Doncic and Biljana Borzan, on Friday announced an initiative in the European Parliament that would force multinational companies to pay taxes where they operate. Borzan and Hajdas-Doncic also claimed that the Croatian government does not want to support the initiative.

In refusing to support the initiative, the government is shifting the burden of the crisis onto citizens, they said.

“According to the latest figures, 10 percent of the EU’s total GDP is stolen, hidden or unfairly distributed, and the populist movements that call for tax cuts have at their core the wish to enable the rich in the business sector to pay less and less in taxes while the entire cost of social spending is shifted onto the middle class, small and micro businesses and EU citizens,” Hajdas-Doncic said at a news conference.

“The SDP considers this an unacceptable way of sharing the national wealth and the only solution is progressive taxation. The main question is how to facilitate fair tax distribution and force the richest to pay their share and participate in the crisis caused by the pandemic,” he said.

He noted that tax or fiscal policies were national policies but that without coordination and a joint approach, EU countries would not be able to respond to the key problems of the last decade, including the question of why everyone was not contributing in line with their economic power.

There is also the question of why the biggest multinational corporations use tax breaks and tax havens and why some member states unfairly, through lower taxes, attract the wealthiest to start business in them.

When the amount of evaded taxes is compared, it accounts for 3 to 4% of Croatia’s GDP for companies that run some business operations in Croatia. The proposal is to make a black list of those companies and to exclude them from any EU programmes, he said.

“I really do not understand why the HDZ-led government of Prime Minister Andrej Plenkovic is opposed to that,” he said.

Difference between left and right

SDP deputy leader and MEP Biljana Borzan said that an EP study showed that the EU loses 30-50 billion euros annually to tax evasion by multinational companies.

A Eurobarometer report shows 86% of EU citizens want stricter control of tax evasion and tax havens and 71% of Croatian citizens believe the problem should be solved at EU level.

A draft directive, to be discussed by the European Council next Thursday, is aimed at obliging big multinational companies with turnovers of more than €750 million to report for each member state how much money they make there, the value of their assets, the number of employees and the amount of taxes paid.

The directive also regulates fines that are proportional and deterring.

“The health crisis brings with itself a major economic crisis, and some countries’ governments can decide to shift the burden of the crisis onto citizens or they can force those who earn big profits in Europe to pay taxes,” Borzan said.

She noted that the directive had been stuck at the Council for four years even though it had passed all the necessary procedures. She explained that a majority could not be achieved as some member states did not want to support the directive, given they themselves are tax havens and some protected their own multinational companies.

Croatia has found itself among them even though it has no such companies, with the government explaining that a decision must be unanimous because it concerns tax policy even though the EC has explained that the directive concerns business reporting, which requires a qualified majority, Borzan said.

She noted that by the start of Croatia’s EU presidency a turnaround happened and majority support was created to launch changes, “but Croatia did not put the issue on the agenda of the Council even though it could have and, as EU chair, should have,” Borzan said, adding that at the time she sent a letter to then economy minister Darko Horvat to put the issue on agenda, but nothing happened.

“We often hear questions about the difference between the left-wing and right-wing parties today. Here is the difference – while the SDP is looking for ways to relieve the burden on citizens, the HDZ has, for reasons unclear to us, been siding with multinational companies which evade the payment of huge amounts of taxes,” she said, noting that according to information available to her, the chances of the directive being passed were very big and that it would be interesting to see which position the Croatian government would take.