Lithuanian Free Market Institute
LFMI
Lithuanian Free Market Institute (LFMI) is a private, non-profit, non-partisan organization established in 1990 to promote ideas of individual freedom and responsibility, free market, and limited government intervention.
ID: 222186719128-03
Lobbying Activity
Response to Improving the working conditions of platform workers
14 Feb 2022
Maintaining the status quo and fostering competition among platforms would better serve the platform workers and consumers
The Directive of the European Parliament and Council on improving working conditions on platform work (hereinafter – the Draft Directive, the Directive) lays down intricate requirements for platforms whose application is likely to have serious unintended consequences for the consumers and workers contrary to the directive objectives.
The fact that individuals themselves decide to engage in platform work suggests that they regard some conditions of platform work as more advantageous, and thus more attractive. It may also be indicative of the desire to distance oneself from employment relationships and related regulatory restrictions on work activities. The breakthrough of the gig economy was preconditioned by the laxity, or even absence, of regulation, i.e., more freedom to enterprise and act.
Centralized rigid regulations of platform workers would negate the very essence of working through online platforms and the employment presumption would unjustly deprive individuals of the ability to decide on their preferred work module and conditions. Imposing labor standards to platform work will reduce the supply of services and increase their cost for the consumers. This may lead to many platform workers losing their income.
Rather than getting employed, the service provider (worker) “buys” the connectivity service through a platform to expand one's operations. In many cases, it is not the platform but its users who rate each other. In order to minimize its risks due to the application of the Draft Directive, it is likely that platforms will start by abolishing the rating system, which will have a negative impact on both service providers and consumers.
The Directive provides for a presumption of an employment relationship if certain criteria indicating control are met. This would unduly deprive the self-employed of the possibility of deciding for themselves the model of organization and the conditions of their activity which they prefer. In would also increase the uncertainty of the application of the Directive. This, in turn, may force out platforms from the EU since the potential risks of operating in this market would be too high to bear in comparison to other markets.
Forcing former service providers and atypical workers into formal and traditional employment relations poses another conundrum, given that the employment framework may be ill-prepared to handle unorthodox work through platforms. It must be kept in mind that platform workers may not wish to engage in traditional employment or are unable to do so due to the peculiarities of their status. The majority of traditional employment contracts do not meet the need for flexibility that is provided by platform work. In such cases, an alternative could be zero-hour contracts that are the closest alternative to platform work and could ensure the needed flexibility.
Given the relatively short period since the rise of platform work and the EC’s proposal to regulate it, it would be prudent not to rush with interventions and instead monitor the market in order to better understand how it operates and to foster competition among platform operators. In addition, by being able to conclude contracts freely, companies are encouraged to compete in order to attract service providers by providing more favorable conditions.
The full position paper “Maintaining the status quo and fostering competition among platforms would better serve the platform workers and consumers” may be found following this link <https://bit.ly/3LuSKIq> (or see attachment), and the executive summary of the position paper is available here: <https://bit.ly/3sIvGNB>.
Read full responseResponse to More efficient law-making in taxation: a move to QMV
17 Jan 2019
There are multiple reasons to suggest though that moving to qualified majority voting in taxation is not the best tool to achieve the objectives of the proposal..
Moving to qualified majority voting in taxation would destroy tax competition between countries, and this would have adverse effects.
Further tax harmonization, which would be facilitated if the qualified majority voting in taxation would be adopted, would reduce the pressure on national authorities to maintain an efficient and competitive tax policy. Member States would become more dependent on EU to impose EU-wide rules and regulations in the field of taxation.
The potential abolition of the unanimity rule, which is targeted at direct taxation – the taxation of profits and income, and goes directly against tax competition – causes a great danger to those Member States, that have been effective in advancing their competitiveness and attracting major foreign investment, due to their favourable tax rules. This would lead to the situation where the majority of countries, which are not tax competitive due to their own fiscal issues, can impose rules on other countries, which are fiscally sound and can offer better tax conditions for workers and companies.
Moving to qualified majority voting in taxation would not only fail to attain the desired goals but would also engender a number of negative consequences:
● It would be incompatible with national sovereignty in the EU over tax matters, which is a fundamental principle for the EU.
● By easing the pressure on national authorities to have an efficient and competitive tax policy, it could bring harm to the competitiveness of the entire EU economy.
● It might increase already high tax burden on the large share of EU taxpayers.
Recommendations
● The European Commission should work to preserve the highest degree of tax competition between Member States that allows countries to provide the best conditions to its citizens and businesses to work. The initiative of moving to qualified majority voting in taxation poses the danger of fundamentally hindering this vital feature of the internal market and should therefore be reconsidered.
● High-tax EU Member States advocating tax harmonisation through moving to qualified majority voting should take practical steps towards improving their tax systems via aligning them with those tax regimes that are the most conducive to economic growth.
Read full responseResponse to Own Resources in relation to the EU budget for the future
28 Jun 2018
On the System of Own Resources of the European Union
The European Commission (EC) has presented a new proposal on the System of Own Resources of the European Union. The aim of this proposal is to modernise existing Own Resources by:
decreasing to 10% the percentage of the customs duties the Member States retain as "collection costs";
decreasing the share of the Own Resource based on Gross National Income, and keeping it as the balancing resource;
simplifying the Value Added Tax based Own Resource and increasing its share in the overall Own Resources;
introducing a basket of new Own Resources, that will cover approximately 12 % of the budget, consisting of: a share of the relaunched Common Consolidated Corporate Tax Base; a share of the auctioning revenue of the European Emissions Trading System; a national contribution calculated on the amount of non-recycled plastic packaging waste;
establishing the principle that future revenues arising directly from EU policies should flow to the EU budget;
phasing out corrections;
increase the Own Resources ceiling.
If agreed on, the provisions of this proposal shall apply from the 1st of January 2021 (except the provisions regarding the CCCTB which will apply from the second year following the date of application of national provisions).
Proponents of this proposal claim that:
- the present level of 20 % collection costs for customs duties can be considered as higher than what would actually be needed as an appropriate incentive for diligent collection of custom duties by national authorities on behalf of the Union;
- recent economic developments are creating a challenge for national authorities when it comes to measuring Gross National Income precisely, therefore new revenue components will allow to keep the GNI based Own Resource as a balancing component and reduce its weight;
- current VAT-based Own Resource requires numerous corrections and compensations as well as the cumbersome computation of a weighted average rate thus it can be reformed by focussing on the standard rated supplies; streamlining the procedure to calculate the Value Added Tax base and; applying a uniform call rate on the standard rated base;
- the 'basket' of new Own Resources which are linked to key EU policies, specifically climate change, environmental policy, plastics strategy, the circular economy and the Single Market, will provide fresh money to the EU budget.
There are multiple reasons to suggest though that the proposed reform of the System of Own Resources of the EU may not only prevent the achievement of its goals, but may also be harmful to the companies and taxpayers of the EU and to the Single Market as general.
The reform proposal ignores the core problem of the EU Finances - EU budget cannot satisfy the ever growing appetites for financing a broad range of different programmes and projects and proposed reforms do not provide a systematic change but an opportunity to extract extra revenue from taxpayers
The EU budget has been a result of political negotiations and trade-offs between member states rather than a well-grounded financing scheme of generally agreed pan-European goals. The politicized use of EU funds distorts the motivation of market participants, harms free competition, impairs an effective allocation of limited resources, incentivizes corruption, contributes to higher inflation in recipient countries and brings benefits primarily to particular interest groups rather than to all EU citizens. Failing to cooperate on mutual goals and seeking to maximize their own benefits, member states end up in a situation where funds are used inefficiently.
Policies that are funded from the EU budget are too demanding, too ambitious and therefore unrealistic. Policies are incoherent and contradictory; some of them erode European competitiveness, so the aims of every policy and their consistency need profound re-examination.
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