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Week Ahead (15 March)

Monday, 15 March, to Wednesday, 17 March - Netherlands holds 2021 general election

Voting has opened in the 2021 Dutch general election, which is being held over the course of three days this week in an attempt to mitigate Covid-19 risk factors. The country is currently governed by a caretaker government led by Mark Rutte and his VVD party, which resigned in January following a scandal around benefit fraud accusations which led to the resignation of the Dutch Labour Party (PVDA) leader Lodewijk Asscher.

The scandal aside, Rutte has enjoyed a relatively strong year domestically, with his handling of the Covid-19 crisis leading to a bump in support for the VVD. On the European scene, Rutte forcefully argued against the introduction of "Eurobonds" and headed a "frugal four" of nations which succeeded in diluting proposals for extensive grants in the recovery fund, further improving his popularity at home.

The VVD remains on course to be the largest party in the Dutch parliament; the latest IPSOS poll shows that it is on course to win 39 of the 150 seats available, well ahead of the far-right Party for Freedom (PVV) on 21 and the Christian Democrats (CDA) on 17 and the far-right Party for Freedom (PVV) on 17. As 76 seats are needed for a majority, the VVD will have to assemble a new coalition. The outgoing government is made up of the VVD, CDA, Democrats 66 and the Christian Union, and current polling suggests that a fourth Rutte administration made up of the same parties is likely.

Tuesday, 16 March - ECOFIN Ministers to discuss Digital Taxation

Member state economic and finance ministers will discuss digital taxation at tomorrow's ECOFIN meeting. The talks will involve a discussion on the current position of OECD-level negotiations and consider how progress may be made on taxing the digital economy.

A digital tax was proposed in July 2020 as a new EU own resource to support the EU’s borrowing and repayment for Next Generation EU. Global-level discussions on a digital tax, led by the Organisation for Economic Cooperation and Development (OECD), are also ongoing. Global talks were revived in February when the US abandoned its demand for a so-called ‘safe harbour’ measure, which would have allowed tech companies to opt out of the new global digital tax rules, to be included in Pillar 1 of a global agreement. The US has since expressed hope for an agreement by mid-2021.

The matter of the future method by which tax measures are passed in the European Union is also likely to arise at Tuesday's meeting. Per our report of 11 March, the Commission is investigating the possibility of using Article 116 of the Treaty on the Functioning of the European Union (TFEU) to pass tax measures via a majority vote rather than by unanimous consent.

Saturday, 20 March - Polish Prime Minister to present “new deal” but coalition split threatens approval process of EU Recovery Facility

The Law and Justice Party, PiS, leaders of the right-wing coalition governing Poland, may be forced to rally support for the approval of the Recovery and Resilience Facility (RRF) among opposition parties this week after its coalition partners, United Poland, said that it could not support the EU's €672.5 billion plan. Michał Wójcik, a minister in the prime minister’s office, expressed doubt last week as to whether the borrowing required for the RFF is legal, while United Poland MEP Patryk Jaki explicitly stated last week that his party would leave the coalition rather than agree to support the recovery fund.

The Polish Prime Minister by Mateusz Morawiecki intends to unveil a comprehensive investment plan next Saturday but a key element of this will be the funding provided by the EU RRF. Should United Poland continue to withhold its support, the United Right coalition will be unable to approve of the recovery fund proposals without the aid of the opposition, which is likely to push for a stronger say in planning how the moneys are spent. Lewica, the alliance of left-wing parties in the Sjem, has indicated that is likely to lend support to the government for the approval process.

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