EU pledges to crackdown on double taxation

Removing cross-border tax obstacles for EU citizens and businesses, as well as preventing tax fraud and increasing tax transparency a must for the European Union action in the fiscal field

European Parliament’s Economic and Monetary Affairs committee has approved a report by the Sweden’s Folkpartiet MEP, Olle Schmidt on the EU’s Annual Tax report. The report focuses on the tax initiatives taken by the Commission during 2011 and on areas where further initiatives are necessary in order to improve the functioning of the Single market and to create a more competitive Europe.

The report also addresses tax problems that EU citizens face in cross-border situations within the EU. For example, EU citizens working or investing in another EU Member State who encounter issues of double taxation and have difficulties with obtaining allowances, tax reliefs or deductions from foreign tax authorities.

Though taxation is mostly a national and not an EU competence, the financial and economic crisis has revealed the risks posed to the Single Market by contradictory tax policies and the need for closer coordination.

The EU Treaty foresees only simple consultation of Parliament and unanimity in the Council. The report just approved by the EP’s Economic and Monetary Affairs committee is a clear indication action is needed to coordinate Member states’ fiscal policies and avoid cases of double taxation.

"I welcome that the Commission recently adopted a Communication on Double Taxation, where concrete measures are announced, including the creation of an EU Forum to develop a code of conduct on double taxation and a binding dispute resolution procedure for unresolved double taxation cases. This is an area where the European Union can make a real and practical difference to EU citizens", commented Olle Schimidt.

A public consultation carried out by the Commission found that more than 20% of reported cases of double taxation of businesses were worth over €1 million, while for individuals, more than 35% of double taxation cases were worth more than €100 000.

EU Council extends Euratom program for nuclear research for 2012 and 2013

The European Council has extended the European Atomic Energy Community (Euratom) framework programme for nuclear research and training activities (17503/11+ COR) for a two-year period.

Due to expire at the end of 2011, the Euratom program is extended in order to align it with the end of the EU’s current financial cycle, set for end of 2013. Euratom programs are limited by the Euratom treaty to five years, whereas the general 7th framework program for research, which runs until end 2013, lasts for seven years.

The framework program comprises two types of activities:

1. Indirect actions

Indirect actions in fusion energy research and research on nuclear fission, safety and radiation protection (17504/11).

The fusion energy research activities include, as a central objective, to achieve the construction of ITER (International Thermonuclear Experimental Reactor), a major experimental facility to demonstrate the scientific and technical feasibility of fusion power.

Rules for the participation of undertakings, research centres and universities and for the dissemination of research results apply to this specific program (17506/11).

2. Direct actions

Direct actions for activities of the Joint Research Centre in the field of nuclear waste management, environmental impact, safety and security (17505/11).

The nuclear fission research activities are in line with the objective of enhancing the safety of nuclear fission and other uses of radiation in industry and medicine.

The activities of the JRC cover customer-driven scientific and technological support for the formulation, development, implementation and monitoring of the Union’s policies, with an enhanced focus on safety and security research. The JRC works as an independent reference center of science and technology in the Union.

A maximum amount of EUR 2.5 billion, including additional financing of the ITER project (18322/1/11), is allocated for the implementation of the Euratom programme for the years 2012 and 2013.

Its extension will continue to contribute to the implementation of the “Innovation Union” strategy (17165/10), by enhancing competition for scientific excellence and accelerating the deployment of key innovations in the nuclear energy field, notably in fusion and nuclear safety, and will contribute to tackling energy and climate change challenges.

Closing nuclear plants “an economical aberration”

No source of energy is 100 per cent safe: closing a nuclear plant for safety issues is an irrational decision, a true economical aberration. Closures should only be decided upon economical reasons. Our future, in the long period, lies with renewables, but nuclear does have its own share of an energy mix. A proposal for the next President of France: a carbon tax can help avoid the explosion of an energy price bubble, whose social and political consequences would be hard to bear.

 

Jean-Marie Chevalier is a leading expert in economics, and in the economics of energy policies. Professor of economics at the University of Paris-Dauphine, he is also Director of the Centre de Géopolitique de l’Energie et des Matières Premières, Senior Associate at Cambridge Energy Research Associates (CERA, Paris office), member of the Board of Directors of Nexans, member of the Economic Analysis Council in France.
He loves to depict himself as a disciple of Descartes, and as such he always preaches that “We must look at things in a rational way. Economists must be rational”.

Recently he has been guest to an Italy-France roundtable organized in Milan by Università Bocconi’s IEFE (Centre for Research on Energy and Environmental Economics and Policy), a top level thin-tank in all that is energy and economics. Professor Chevalier started his contribution to the roundtable by claiming the superiority of economics when taking decisions concerning energy policies.

 

“Closing nuclear plants for safety reasons? That is economic aberration, a destruction of value. We should close what does not work, not what works”.

 

As for safety, Jean-Marie Chevalier is convinced that is not an issue: it is still economics that should lead the way. Safety comes afterwards, it cannot be considered an acceptable reason for closing a nuclear plant, as “there is no 100 percent safe energy source: each has its own strengths but also its weaknesses”. Our focus, then, should be on increasing the efficiency and modernity levels of our sources of energy.

 

“Each country has its own agency dedicated to the control of nuclear power plants. I believe France has a very competent agency, with a proven track record over all these years. If the agency says that a plant should be closed, because it is safer, more efficient or otherwise, then we should close it. If you need invest money in it, let’s say 200-300 million euros, in order to improve its efficiency or safety, then it should be up to the management company to assess the cost of the investment, its economics with regard to electricity production costs, and take the decision. But if the agency says that a plant is fine, why close it? As mentioned, it is what does not work properly you should close, not what is running efficiently”.

 

Can Nuclear energy help us reduce CO2 emissions and struggle against global warming?

“In France many claim we do not need any more nuclear power plants. On the other side, China is planning to build 25-30 plants within the next twenty, thirty years. Theirs is a good choice: China has an energy balance with an elevated level of carbon emissions, and this is beginning to cause them problem”.

Building so many nuclear plants, though, will not change the Chinese situation in terms of CO2 emissions. Our very future lies within renewable sources. Though Jean-Marie Chevalier does not sound very confident in our chances to counter climate changes and global warming.

 

“If I consider what our energy future in the short and medium term will be, the crucial point, in order to really break this situation of high carbon emissions and combat climate change, is to switch to renewable energy. But I am equally sure that we are going to fail to contain the increase in global temperatures below two degrees as it was hoped by the International Panel on Climate Changes.

 

One way to stimulate the shift to renewables is to increase the prices of energy through tools such as carbon taxes. A radical change in well-rooted policies.

 

“It is a widespread opinion that energy is cheap in France. It is not that prices are low, the various governments have simply locked their increase. So the current price of electricity in France does not reflect its real cost. And in a pre-elections period we can not expect things to change”.

 

A tight political control over prices has resulted in a sort of energy bubbles thats scares Professor Chevalier. If that bubble breaks, it could be like an earthquake. Actions are needed to make it release its energy slowly and under control.

 

“The awakening, when it happens, will be traumatic. Some scenarios foresee a 55% increase in energy prices between 2010 and 2022. Such an increase leads to a serious consequence: energy poverty. It is socially unsustainable. People will find themselves on the street, unable to bear the costs of energy bills”.

 

How to respond to such threat, the question coming silently from the audience in Milan.

“On the case of prices and the cost of electricity I had an idea, very personal. I have not sold it to any presidential candidate, yet. Increase dramatically the cost of energy, perhaps through a carbon tax. With two basic goals: the first is to finance the transition to renewable energy, because that is where our energy future lies; and secondly, to manage situations of energy poverty, in place of checks in favor of those who cannot afford the bills we should leverage on incentives to allow them to change their car, their heating system”.

 

A final thought, before leaving the roundtable.

“Efficiency and modernity: these are the two fundamental aspects of the issue. We must focus on increasing the efficiency of each energy source. And then you have to keep in mind that each source has its strengths but also its weaknesses. The 100% security does not exist”.

Royal Dutch Shell looking at LENR as game-changer

Royal Dutch Shell, one of the world’s largest energy companies, is seriously considering exploring low-energy nuclear reaction (LENR) research as a possible game-changer in the energy business. Two of the company’s scientists, Anitha Sarkar and Gilles Buchs, with the backing of the Shell GameChanger program, are already looking for opportunities to work actively with LENR experts.

Shell GameChanger is a program that, as it is explained in its website, “helps move ideas to reality by sponsoring entrepreneurs to develop their ideas into a product that can be introduced to the marketplace”. Specifically, through this program Shell is aiming for “innovative ideas that address a demand or significant problem in the energy industry and have the potential to change the game”.

This is not the first time Shell has looked into LENR research. In 1995, Shell sponsored LENR research at the French laboratory Laboratoire des Sciences Nucléaires at the Conservatoire National des Arts et Métiers (CNAM). This research showed high-quality LENR work, and the research paper provided the expected level of professionalism in a scientific communication.

The researchers found a small ratio of excess heat compared to the input electrical power in both light- and heavy-hydrogen experiments. However, the experiments demonstrated a sustained period of steady excess-heat production. The hydrogen experiment produced 16 megajoules during a 39-day run, with a mean excess-heat production of 4.7 Watts from a 150 Watt electrical input.

Consistent with the extensive body of LENR research, the CNAM researchers found no significant levels of dangerous radiation from neutrons, X-rays or gamma rays. The researchers failed to find nuclear signatures consistent with the amount of excess energy produced. They did not, however, check for isotopic shifts or transmutations, and they did not use solid-state nuclear track detectors to look for alphas or bursts of spallation neutrons.

The current Shell initiative follows an inquiry from the United States intelligence community into LENR. Both news items are powerful indicators that 2012 is the year that LENR will move forward into serious technology research.

The euro crisis: lessons for East Asia

The crisis of the European union common currency is threatening the well being of the whole world. Economists and analysts the world over are studying the mechanisms of the crisis in order to understand which particular lessons can be learned for the next future. One of these scholars is Stephen Grenville, Visiting Fellow at the Lowy Institute for International Policy ed anche ex Vice Governatore della Reserve Bank australiana.

The article has been published on the East Asia Forum website. An earlier version of this article was first published here on the Lowy Institute for International Policy website.

Only a few years ago, the European common-currency arrangements were held up as a possible model for Asia.

With the euro under serious threat, we do not hear much about this now, but the current mess in Europe could well contain a number of lessons for Asia.

Lesson one might be surprising at first sight: membership of a currency block is still seen as valuable. Ireland, Portugal and Greece seem ready to undergo years of wrenching austerity in order to stay in. Greece understands that in leaving the euro, it would be swapping one set of problems for another. And countries such as Turkey are still very ready to join.

Lesson two is more obvious: it is hard to make common currencies work. Currency blocks work smoothly only if the member economies have a lot in common. There was always the promise — or hope — that membership would be the catalyst to make Greece more like Germany. But for Greece, there has been neither economic nor political convergence, and continuing membership may prove to be unworkable.

Lesson three is an old one: financial markets are prone to radical changes of risk assessment and lemming-like herding. The markets initially treated Greek debt as more or less on par with German debt. But when they belatedly perceived the reality, they pulled the plug.

Lesson four is that support mechanisms are needed when markets lose confidence. Even countries like Spain and Ireland — which are trying harder than Greece to be good euro citizens — need external support. The euro arrangements are providing this through loans and the support of the European Central Bank (ECB). There is a further sub-lesson here: when the crunch comes and confidence is lost, the supportive response is always tentative, inadequate and chaotic. It is always too little, too late.

So, what are the implications for East Asia’s emerging economies? Despite strong international advice after the Asian crisis to adopt freely floating exchange rates, these countries are yet to adopt a pure free float. They are managing their exchange rates, not only to smooth out volatility, but also to resist appreciation pressures that would diminish their international competitiveness. And as their production structures are becoming increasingly integrated through supply-chain frameworks, maintaining competitive parities with neighbours is becoming more important.

So far, this maintenance of competitive parity has been an informal affair, and it could be given more regional structure. If each country maintained stability (perhaps within a band) vis-à-vis a common basket of currencies — including a heavy weighting of Asian currencies — this would have some of the characteristics of the early stages of Europe’s move to the euro.

While this sort of structure creates tighter relativities, it sets up potential vulnerabilities. In Europe, the euro’s precursors — the ‘snake’ and the European Exchange Rate Mechanism — both broke down. So support arrangements like those offered by the ECB would be an essential part of any tighter currency arrangements. Emerging East Asian economies might receive help from the IMF, but many still carry bitter memories of the Fund’s failures in 1997. And while the Chiang Mai Initiative is exactly the sort of arrangement that might do the job, it proved unusable when it was needed in 2008, and in its present form provides only trivial support.

Asia might also heed the lesson that currency blocks should choose their participants carefully. One suggestion is that a smaller yuan-based grouping of ASEAN, China, Hong Kong and Taiwan might make more sense than a region-wide linkage.

All this leaves Asian exchange rates in an awkward policy space. The managed rates of the post-1997 period are working well enough, but continued reserve accumulation is not sustainable, and running chronic current account surpluses is not optimal. Capital should be flowing ‘downhill’ to these emerging countries, not in the reverse direction. Establishing a stable range of relativities among a sub-set of the region might be a start in the right direction.

Talvivaara, Cameco, Euratom Supply Agency approves deal

Following the European Commission authorization, Euratom Supply Agency has approved the agreement between Talvivaara Mining Company Plc and Cameco Corporation for the sale of uranium. The authorisation enables Talvivaara to sell its uranium production to Cameco under the terms of its off-take agreement. It also includes provisions which guarantee the security of uranium supply in the European Union.

ESA’s ok represents the first step in the uranium permitting process. It also is a requirement as part of the Finish government licensing procedure. The actual start of production, though, is subject to further EC authorization regarding the Euratom Treaty, Environmental Permit approval and license from the Finnish Government to extract uranium as a by-product.

The Environmental Permit application for uranium extraction was submitted to the Regional Environmental Permitting Agency in March 2011 and the decision on the permit is expected during Q2 2012. In April 2010, Talvivaara applied to the Ministry of Employment and Economy for a license to extract uranium as a by-product, in accordance with the Nuclear Energy Act. The application is currently being processed and approval by the Finnish Government is expected in early 2012. EC’s approval pursuant tothe Euratom Treaty is also expected in early 2012.

Pekka Perä, Talvivaara’s CEO, commentedthat the Finnish company is "delighted by the news that our contract with Cameco for the off-take of uranium was approved by the ESA. We have successfully reached the first milestone in the permitting process and we remain confident that, with final approvals over the coming period, we will soon be able to deliver further value from our ore at Talvivaara through uranium by-product extraction."

Nuclear energy a ‘must’ for a sustainable energy mix

Including nuclear energy into a country’s energy mix is the best way to ensure a sustainable energy production, claims a report by the World Energy Council released a couple of weeks ago only.

The report – Policies for the future: 2011 Assessment of country energy and climate policies – starts from ranking countries according to how well they perform in the three pillars of energy policy: energy security, environment and affordability. The bad news, for all anti-nuclear activists, is that the best performers are those who have a good share of nuclear energy in their own energy mix: Switzerland (40% nuclear for electricity), Sweden (40% nuclear), France (75% nuclear), Germany (30% nuclear prior to reactor shut down earlier this year) and Canada (15% nuclear). A clear sign that nuclear plants cannot be closed just like that – just because a Kanzlerin has no strength to counter a screaming and yelling Gruene minority, all references to germany and Angela merkel is actually wanted – if our goal is a coherent and robust energy policy with a sustainable world as final destination.

These results are based mainly on data for 2009-2010, and that is why they still take Germany into consideration. Thus, they do not reflect the effects of changes in policy caused by the Fukushima nuclear accident and recent political instability in North Africa and the Middle East. It is clear, however, that nuclear energy plays a prominent role in the electricity generation mix of all countries highlighted and that moving away from nuclear could impact their performance.

The report notes that focusing solely on reducing greenhouse gas emissions and relying on market mechanisms only is not enough to achieve sustainability. Industry and policy makers must continue to work towards "Ensuring a stable regulatory regime that supports a large volume of capital investments while allowing policy updates and revisions as necessa; Driving changes in energy systems at a pace that may be faster than markets alone will support; Stimulating an urgency to reduce carbon emissions and the policies to drive those changes, while building and maintaining support from consumers and citizens."

Speaking at a media event World Energy Council Chairman Pierre Gadonneix, stressed the importance that; "public policies must provide the market with robust frameworks and typically grant actors with: prices that reflect real costs, long-term visibility, an implicit or explicit carbon dioxide price, an assumed responsibility of states to develop and ensure safety and acceptance, as well as environmental standards."

Education, not command

Europeans do welcome their governments and public institutions’ efforts to spread a deeper understanding of healthy eating, by educational policies at school and better labelling of food prodcts. At the same time, though, they are not going to accept any further intrusion into what is considered a citizen’s own sphere.

Funded by the European Commission, the EATWELL Project – focused on effective policy interventions to promote good nutrition activity across the EU amidst the rising obesity epidemic – led a survey  in five European countries – UK, Italy, Belgium, Denmark and Poland – to investigate the acceptance of nutrition policies.

“The two policy actions most accepted are the improvement of nutritional education in schools and nutrition labelling measures. In contrast, the least accepted policies are the control of the nutritional content of workplace meals and the introduction of food and drink advertising bans for adults”, said Dr Mario Mazzocchi, University of Bologna, during his presentation of the survey preliminary results at the 11th FENS European Nutrition Conference in Madrid on Thursday 27 October 2011.

Public acceptance of nutrition policies is influenced by age, economic wealth, political views, obesity attributions, and the willingness to pay for such policies.

Support for nutrition policies increases with age and physical activity level, and decrease with economic wealth. People who drink more heavily tend to be less supportive. Political views similarly play a role in acceptance, with conservative political views associated with weaker support regarding advertising regulations and information measures. When it comes to fiscal measures, left of center citizens are significantly more supportive. Consumers who eat out at modern quick service restaurants and frequently consume prepared meals are less supportive of nutrition policies.

There is great variation between countries when it comes to acceptance of nutrition policies.

“Denmark is the most supportive of fiscal interventions, and is also more willing to pay for healthy eating policies in general” said Dr Mazzocchi, “less than 16% of Danish citizens would oppose a tax rise to fund healthy eating actions, and most are prepared to accept a modest rise in taxes to fund measures like price subsidies for healthy foods, free home deliveries for the elderly and education measures”.

In other countries the preference is rather for fewer healthy eating policies and lower taxes.

Growing crops for biofuels can release GHG, scientists warn EU

Growing crops for  biofuel production can negatively impact levels of greenhouse gases. As a consequence, EU commissioners and experts should carefully pay attention to this undesired side of biofuels policies and modify them accordingly.

The European Union has put in place a target to source 10 percent of its transport fuels from renewable sources, mostly biofuels, until 2020. A group of over 150 scientists from all over the globe, though, are now claiming that growing crops for conventional biofuels can indirectly result in substantial GHG emissions through the conversion of forests and grasslands to croplands or pasture to accommodate biofuel production. The assumption is based on a large body of peer-reviewed research over the last several years.

The threat to the EU programs and targets and the need to accomodate the new findings into the 27-Countries union’s environmental policies has been made clear into a letter to the European Commission. In the letter, the scientists call for the recognition of and accounting for indirect land use change impacts as a part of the lifecycle analyses of greenhouse gas (GHG) emissions from biofuels.

“Without addressing land use change, the European Union’s target for renewable energy in transport may fail to deliver genuine carbon savings in the real world,” the letter states. “It could end up as merely an exercise on paper that promotes widespread deforestation and higher food price.

The EU Commission is currently working to finetuning the rules and accounting methods for calculating the indirect land use change impacts of increased biofuels production. These rules are going to play a large role in determining which biofuels will count towards the 10 percent target and qualify for financial support. With their letter, the scientists are clearly stating emissions associated with indirect land use change are too significant to be ignored in the new version of the accounting methods.

“There are uncertainties inherent in estimating the magnitude of indirect land use emissions from biofuels, but a policy that implicitly or explicitly assigns a value of zero is clearly not supported by the science,” the letter states. “All the studies of land use change indicate that the emissions related to biofuels expansion are significant and can be quite large.”

Small is beautiful

The current economic difficulties are convincing businessmen and investors in putting their money into the development of small modular reactors (SMRs) for commercial use in electricity production.

SMRs are still in their first development stage, but their low cost and high practicality is attracting the attention of all those who believe nuclear energy is worth investing in. Their development is starting from the different models used to power nuclear submarines for more than a half-century.

Ranging in size from 25 megawatts to 125 megawatts or more, and no bigger than a small railroad car, an SMR can be built in a factory instead of at a nuclear site for a fraction of the cost and in less than half the time of a large nuclear plant. Though a conventional nuclear plant is cheaper on a cost-per-kilowatt basis than a cluster of SMRs with the same power output, SMRs are more affordable if ordered and built one at a time, as the demand for electricity arises.

Importantly, most SMRs would be located underground for security, and placed one next to another.

In other words, since modules using a standardized design could be built in series over a number of years, SMRs would be much easier to pay for than a large power plant, whether nuclear or fossil fuel.