Week Ahead (22 March)
W/C Monday 22 March - EU Institutions ramp up push towards digital tax
This week will see a multi-fronted push towards an EU wide digital tax, beginning with the European Parliament subcommittee on Tax Matters which will have an exchange of views on digital taxation with representatives of the Portuguese Presidency of the European Council today, and with Competition Commission Margrethe Vestager on Tuesday.
Also on Tuesday, the Parliament’s Economic and Monetary Affairs Committee is expected to adopt an own initiative report on OECD negotiations on a Digital tax and a possible European Digital Tax. Amendments tabled by Socialist and Green MEPs call on the European Commission to make use of Article 116 of the Treaty on the Functioning of the European Union to introduce a digital tax which would enable the Commission to circumvent the requirement for unanimity in tax decisions at Council level.
While the European Parliament will continue to huff and puff about the necessity of a digital tax, the debate that matters this week will take place at the Summit of EU leaders from 25-26 March. Member States must agree EU wide tax changes by unanimity and as things stand there are at least 9 Member States (Ireland, Luxembourg and Malta, Sweden, Finland, Latvia, Germany, the Netherlands and Romania) opposed to the idea on varying grounds. Even if the Commission managed to use Article 116 to try to push through a digital tax by qualified majority voting, there would be insufficient support unless Germany was persuaded to drop its opposition.
Tuesday, 22 March - Irish trade data to be released
The Central Statistics Office will release data on Ireland's trade during January on Tuesday, covering the situation in the month after the UK's departure from the EU. The results will also reflect data released last week on trade in goods, which showed that year-on-year imports from Britain decreased by 65% in January. In monetary terms, trade declined from €1.4 billion to €497 million when compared to the same period last year. The decline was mostly attributable to a fall in imports of food and live animals, which dropped by 75%, and fuels, which fell by 71%. Year-on-year, exports to the EU also decreased, by 23%.
The CSO pointed to a number of factors for the declines recorded, including the ongoing pandemic, difficulties in complying with new customs requirements and stockpiling of goods in the final quarter of last year as preparations for Brexit intensified.
Wednesday, 24 March - Eurozone flash composite PMI to be released
The latest Eurozone flash composite PMI will be released on Wednesday, reflecting economic conditions in the Eurozone in March. PMI results for February showed that the rate of contraction slowed during the month, but still fell below the 50.0 mark which indicates growth. The index posted 48.8, up from the 47.8 recorded in January and beating the flash reading recorded earlier in the month. The results indicate that the Eurozone is on course for a double-dip recession, having logged four successive months without growth. The level of decline, however, is much less severe than that recorded during the first lockdown in March last year, when it plummeted to 31.4, the worst result since data was first collected in July 1998.