European Economic and Social Committe proposes measures to boost private sector contribution to the SDGs

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EESC

Achieving the Sustainable Development Goals (SDGs) requires more than political commitment, says the European Economic and Social Committee (EESC). Increased investment, especially by the private sector, is needed to address current economic, social and environmental challenges. The Committee therefore advises the EU and its Member States to adjust their investment and tax policies to enhance growth prospects, and thereby private sector contributions, to accomplishing the SDGs.

At its December plenary session, the EESC adopted an own-initiative opinion that underlines the importance of private businesses in achieving the SDGs. In its opinion, the Committee stresses the role of investment and taxation policies to promote them.

Krister Andersson, rapporteur for the EESC opinion, explained the Committee’s approach as follows: Taxation policies determine the economic environment in which investment, employment and innovation in businesses take place and they provide governments with revenues for financing public spending. These policies are hence fundamental for achieving the Sustainable Developments Goals and they must be made fit for purpose.

To achieve conducive growth prospects, the EU and its Member States have to take steps for additional policy measures in the area of economic policies and tax systems, to enhance the credibility of a sustainable growth agenda. These measures could help increase private investment and consequently close the global investment gap. More specifically, the Committee proposes using taxation as an instrument for environmental protection and to govern the digitalised and the informal economy.

Tax policies must become an instrument for environmental protection

In its opinion, the EESC proposes the creation of a coherent framework and implementation of efficient plans in the area of environmental taxation. Several of the SDG targets relating to climate protection would benefit from it. Environmental tax policies could be employed to combat climate change and protect ecosystems in the oceans and on land. By affecting the pricing structures of natural resources, tax policy can be used to promote affordable and clean energy and stimulate responsible use of common natural resources.

Phasing out subsidies on inefficient fossil fuel could be an example of a policy mix in the field of taxation, said rapporteur Krister Andersson. The EESC rapporteur believes that it would bring about important budget savings for governments and make these types of fuel less attractive for businesses and consumers. He said: If governments redirect these savings towards increasing the share of renewables in the global energy supply, it would be a way to support universal access to clean energy.

The informal economy should be addressed

Appropriately designed tax systems, using broad tax bases and non-distorting tax rates, and an institutional framework which allows for the integration of the informal sector in the formal economy, would have a positive effect on several SDGs. In the EESC’s view, it could contribute to the reduction of tax distortions, enhance economic growth and job creation and ensure access to public services and social protection. The latter would also promote gender equality.

The EESC considers that certain conditions must be fulfilled to mobilise domestic resources:

  • Tax rulings should be made in an open and transparent manner;
  • Systems should be put in place to ensure the accountability of civil society organisations and parliamentarians;
  • Governments must be transparent with taxes and expenditure; and
  • Taxes should be visible.

Apart from tackling the informal economy, the Committee recommends that the EU joins the Platform for Collaboration on Tax to further engage in global tax debates. The EESC considers that a global solution for the corporate taxation of new business models in the digitalised economy must be found. This solution should seek to promote economic growth and cross-border trade and investment.

Krister Andersson said in this regard: The international community needs to review its criteria for the allocation of taxation rights to market and production countries. New rules should be fair for small and large consumer countries and also for developed and developing countries. Proper remuneration for the contributions made – for instance in terms of innovation and entrepreneurship – must be recognised.

Finally, the EESC stresses in its opinion the importance of involving organised civil society at all levels of adjustments to the fiscal and taxation system to achieve the SDGs. Civil society represents key stakeholders in the implementation of the 2030 Agenda and much of the needed investment will come from the private sector.

Background

The Sustainable Development Goals (SDGs) are the blueprint to achieve a better and more sustainable future for all. The 17 Goals address global challenges, including those related to poverty, inequality, climate change, environmental degradation, peace and justice. The SDGs are at the heart of the 2030 Agenda for Sustainable Development, which was adopted by all United Nations Member States in 2015.

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