A lobby register a first step in strengthening trust

For many years there has been a frenetic debate in the Netherlands about lobbying legislation. In particular, the introduction of a lobby register is receiving a lot of attention in that discussion. Such as in the FD article of 20 January, “Lobby register? The Netherlands is not in a hurry for it yet”. In this article, the scientist says “wait and see”, the lobbyist calls it “embarrassing” that there is still no register, and a lobbying politician talks about “100% symbol politics”.

It strikes me that the article does point very strongly at the minister of the Interior and at lobbyists. Whereas the role and responsibility of the House of Representatives remains unaddressed. Meanwhile, the House has so far imposed few lobbying rules on itself other than abolishing continuous access passes for former MPs. For instance, the House of Representatives lacks a public visitors’ register, rules on revolving doors, or insight into individual agendas regarding who or what is being discussed with. And the motive for applying for a lobby pass provided in the FD-article stems more from practical considerations: just as at Schiphol Airport a Privium pass allows you to walk through faster, a lobby pass facilitates access to a number of places in the House of Representatives building. While a MP does not consider the pass a prerequisite for contact, for instance.

Suppose such rules did apply in the House of Representatives I still wonder: and then what? Isn’t the honest story that complete transparency is impossible? Because even if we were to webcast conversations between MPs and ‘externals’, so to speak, it would not be sufficiently transparent for those who do not trust politicians or the decision-making system anyway. All those rules then become just an end in themselves without enhancing the quality and legitimacy of decision-making. For me, this discussion on lobbying legislation is consequently reducible to a discussion on trust. If you look at the Statistics Netherlands trust figures, you see a declining trust of citizens in the House of Representatives, politicians and civil servants. The latest figures date from March 2022 and the trend is likely to have continued. Lobbying rules are only a very small part of reversing this trend. The problem is deeper and more fundamental.

When you take a position on a lobby register as a lobbyist, you should not forget to mention that you yourself are in favour of it. Herewith: also as a lobbying consultant, active for almost 30 years in The Hague, Brussels and Washington, I too think a register is an excellent idea. So now introduce that register as soon as possible. Every little bit helps. The House of Representatives can simply take the membership list of the Dutch Professional Association for Public Affairs, the BVPA, as a starting point for this, as this will already cover a majority of the PA professional group. But don’t try to settle everything down to the last detail. In the FD article of 20 January, the scientist argues that we should first look at what “is effective” before introducing a register. Now, above all, let’s not do that and just get started. And have a critical annual exchange of views and discuss what works and what does not. And subsequently experience, work-wise, what ‘The Hague’ and trust in the system and the professionals operating in it brings.

In doing so, also say honestly and transparently: not everything can be laid down in rules. Give each other a little more trust. Also have confidence in the institutions in which many checks and balances are already in place. If you do not abide by the rules or mores, you will be called to account. First of all in ‘The Hague’. And then publicly in (social) media. Against these existing checks & balances, no lobby register can compete.

Engage the business community for a truly successful Mental Prevention Agreement

More and more people are struggling with mental stress or illness. The COVID crisis has only intensified this. The numbers don’t lie: 1.8 million Dutch people face depression, anxiety disorders and problems with alcohol and drugs every year. Some 840,000 young people experience mental challenges and/or complaints and 1.3 million workers experienced burnout or burnout symptoms in 2019. State secretary Van Ooijen (Prevention) shared these alarming figures last summer in his parliamentary letter on the approach ‘Mental health: a collective good’. The letter also revealed that adults with mental problems are more likely to have physical complaints, are less able to take care of their children and have fewer (good) social contacts. Among other things, loneliness leads to an increased risk of cardiovascular disease, Alzheimer’s and death. Previous research also shows that with stable mental health, life expectancy is 15 to 20 years longer than people with poor mental health.

The Ministry of Health Welfare and Sports is now working with civil society partners to develop the National Mental Prevention Agreement. Our call: draw lessons from the previously concluded National Prevention Agreement to combat substance abuse and directly involve the business community as well as several civil society organizations in its implementation. After all, committed people who care about mental health work here too. Indeed, these organizations are crucial to making the National Mental Prevention Agreement a success. By identifying worrisome behavior in time and sharing observations with healthcare institutions, a lot of problems can be prevented.

How it all started

In early 2021, the House of Representatives passed a motion by MPs Carla Dik-Faber (Christen Unie / Christian Union) and Antje Diertens (D66 / Liberal Democrats) requesting the cabinet to explore the possibilities of a National Mental Health Prevention Agreement. This is how it all started. The motion was prompted by the observation that 840,000 young adults in the Netherlands have a mental illness. At the time, then state secretary Blokhuis (Prevention) was already working on the National Prevention Agreement to reduce smoking, obesity and problematic alcohol use.

In the summer of 2021, young people with mental vulnerability sounded the alarm in The Hague. A long list of organisations that are involved in mental health

Team Geestkracht, together with MIND, Young in Prison, Stichting SAMAH, Labyrint-In Perspectief, Stichting Zwerfjongeren Nederland, Nationale Jeugdraad, Stichting ExpEx, @ease and JongPIT) presented a petition to the House of Representatives. In doing so, the young people called on MPs and the future cabinet (caretaker government) to start working on a National Prevention Agreement on Mental Health.

In a response to the petition, state secretary Blokhuis stated that he endorsed the importance of mental health and will present an exploration in the fall.

Various parties, such as healthcare, education, patient and scientific organizations, entered discussions and two meetings were organized to explore with these organizations the possibilities and preconditions of a National Mental Health Prevention Agreement. The House of Representatives was informed of that exploration in mid-October 2021.

Saving healthcare costs

Investing in prevention of mental health problems would save a lot of healthcare costs. The coalition agreement, concluded by the Fourth Rutte cabinet led by prime minister Mark Rutte at the end of 2021, therefore included the ambition to broaden the existing National Prevention Agreement to include mental health. The ministry of Health, Welfare, and Sport commissioned the an independent research centre in the field of mental health and addiction (Trimbos-institute), the National Institute for Public Health and the Environment (RIVM) and the the Association of GGD’s (Regional Public Health Services) and GHOR-(Regional Medical Emergency Preparedness and Planning) (GGD GHOR) to investigate the savings in healthcare costs. That study, published in late April, showed that the savings in healthcare costs could be substantial. If the mental health of 1 million adult Dutch people improves by five per cent, it could save 144 million euros.

Broad-based agreement

On June 10th, state secretary Van Ooijen (Prevention), minister Helder (Long-term healthcare and Sports), minister Dijkgraaf (Education, Culture and Science), minister Wiersma (Primary and Secondary Education), state secretary Uslu (Culture and Media), minister Van Gennip (Social Affairs and Employment) and minister Schouten (Poverty Policy, Participation and Pensions) sent their approach ‘Mental health: a collective good’ to the House of Representatives. The aim of the cabinet is to make mental health negotiable and provide tools to promote people’s mental health and prevent or timely identify complaints.

According to the ministers, the approach is not yet completely set in stone. There is room for new ideas and initiatives emerging from civil society and the target groups. In their approach, the concluded that they will remain in close consultation and cooperation with the target groups and other parties involved in the coming period to see what is additionally needed. That it will be a widely supported agreement is shown not only by the cooperation of the various ministries. Indeed, there is cooperation with various parties, from municipalities to experts and from various knowledge institutes to employer and employee organizations. The House of Representatives will soon receive a letter about the progress, and will be informed annually thereafter.

A successful Mental Prevention Agreement

Paying enough attention to mental health helps reduce risks of both physical and mental health problems. A widely supported agreement is crucial for a successful Mental Prevention Agreement. Sufficient involvement of various health, youth, and civil society organizations, as well as various companies, is therefore essential to get mental health higher on the political agenda. In a parliamentary letter from October 2022, the minister indicates that discussions have been held with various healthcare, education, patient and scientific organizations, but the business community is missing. This while businesses (think of employers, broadcasters, gambling operators, etc.) can play a role in moving from treating symptoms to addressing underlying causes.

In any case, for many of the actions, it takes time before they show a possible effect. So let us draw lessons from the earlier National Prevention Agreement: the 2020 targets in which legislation was announced have all been met. In contrast, targets that had to be achieved in larger partnerships, or where many components depend on each other, were more often not (yet) achieved. After all, it takes time to set up such partnerships and make them work, while mental health collaboration can raise awareness and impact.

How can effective stakeholder management contribute to achieving a successful Mental Prevention Agreement? For organizations with an interest in this agreement, three rules applied in recent months:

  1. Being there early is useful. Many civil society organizations were involved in drafting the Mental Prevention Agreement from the moment it was mooted in the House of Representatives. This ensures an emphatic stamp on the final agreement.
  2. Informing the House of Representatives with experts by experience is effective. In this case, the House of Representatives was the driver of a Mental Prevention Agreement. By talking to MPs about the experiences of young people, among others, organizations ensured that the interests of young people were placed higher on the political agenda. Organizations such as MIND, Young in Prison, Stichting SAMAH, Labyrint-In Perspectief, Stichting Zwerfjongeren Nederland, National Youth Council, Stichting ExpEx, @ease and JongPIT thus influenced the political debates.
  3. Moreover: working together in a broader coalition pays off. There are countless organizations that want to influence policy, and neither MPs nor officials have time to engage with all kinds of individual organizations. The fact that a coalition engages in the conversation increases the chances of ideas being adopted.

For practically every company, the Mental Prevention Agreement is important. Consider, for instance, ensuring a safe working environment. Make sure you are involved in its implementation. Speak out if you have ideas or suggestions to improve the agreement. Now is the time!

PM Academy programme

At Public Matters, we consider growth and development of our employees important, which is why we invest in personal coaching, development and internal knowledge sharing. We do this with PM Academy, a learning and development programme for employees. At the PM Academy, we offer training courses – given by colleagues and external experts. In addition, the personal coaching of colleagues focuses on other areas in which they want to develop.

 

What is it?

Consultants at Public Matters work on large societal challenges. PM Academy sees to it that internal knowledge sharing is consciously facilitated, especially in a team in which more digital collaboration takes place after the COVID-19 pandemic. In addition, Public Matters wants to make skills and knowledge from different sectors available to colleagues from outside the office. We do this by inviting colleagues and inspiring speakers to talk about their work or passion. This could, for example, be a journalist or (former) MP who talks about contact with politicians and lobbyists.

Working at Public Matters is the way for young PA talent to further develop through learning on the job. In a team of driven, creative and result-oriented consultants, we work in the heart of political The Hague and Brussels. But we also believe it is important to accelerate the development of knowledge and skills alongside your daily work. Young talents at Public Matters get the chance to develop in many different ways.

PM Academy is thus a way of increasing team knowledge & development in a structured way. Learning together = enjoying work together.

 

How does it work?

Twice a month we organise a session. The programme tries to take into account the different functions and experiences of colleagues as much as possible. For instance, a fixed selection of different training courses is part of the onboarding process. In addition, the programme focuses on developing i) skills (e.g. PowerPoint), ii) sector content knowledge (e.g. energy or healthcare), and iii) professional Public Affairs knowledge.

Night of the Lobbyist: time for a new lobbying culture?

The second Night of the Lobbyist took place on 10 November 2022: the evening where lobbyists, academics, students and policymakers exchanged views on the lobbying profession. The evening was opened by Joris Luyendijk, where he reflected on lobby culture from his book ‘The Man with the Seven Ticks’ (De Zeven Vinkjes). After the opening, two series of partial sessions took place, in which colleague Valérie Mendes de León also spoke.

 

In the sub-session ‘Time for a new lobbying culture’, Valérie spoke with Professor of Public Affairs Caelestra Braun (Leiden University), NJR president Kimberley Snijders and Joram Schollaardt, Public Affairs at the Netherlands Society for the Protection of Birds. The session opened with the question ‘What makes you a new lobbyist?’ After considering what old and new lobby would mean, the panel came to the answer that a combination of multiple perspectives characterises the new generation of lobbyists. For colleague Valérie, this means bringing her experiences as a public affairs working group member at the Young Climate Movement (Jonge Klimaatbeweging) into her work at Public Matters – and vice versa. The multiplicity of perspectives and voices provided refreshing insights.

 

The panel then engaged the audience in a discussion about what this new lobbying culture means then: is there really a new lobbying culture? Haven’t resources just changed? Or do changes in the political landscape mean that lobbyists are now needed more than usual? These questions and more passed in review. In the end, Caelesta proposed the seven ticks of the new lobbying culture: more transparency, collaboration, pro bono lobbying, citizen lobbying, intolerance of lobbying against the public welfare, long-term vision and guts.

 

With many new ideas and conversation material, the group left the room, on to the next Night of the Lobbyist.

What to expect from the European Commission this year? Takeaways of the SOTEU 2022

On Wednesday, Ursula Von der Leyen delivered the annual State of the Union Adress in the European Parliament. In her hour-long speech, she outlined an elaborate range of projects and initiatives that will be the focus of the European Commission for the coming year. The speech was gripped by the influence of the Russian invasion in Ukraine, highlighted even more by the Commissioners’ clothes – all dressed in yellow and blue.

Strong Words

Most apparent of this year’s State of the Union were the strong and definitive statements of the President of the European Commission. Some analysts described the speech as a ‘real war time speech’, symbolized by the presence of Ukrainian first lady Olena Zelenska whose name was addressed several times in the European Parliament. Not only did Von der Leyen explicitly show solidarity with Ukraine and other neighboring countries, she also directly referenced the closing of the research center of the VU Amsterdam in the context of the atrocities against the Uyghur population in China.

Energy

Von der Leyen did not mince her words about Putin having started the EU energy crisis, even before the invasion in Ukraine with Gazprom, the Russian state-owned gas supplier, reducing gas supply to the EU. She was proud about the EU already succeeding in reducing its dependency on Russian gas and will continue to do so. As expected, she called for not just temporary solutions to the energy crisis but a permanent paradigm shift.

Short-term

In the short-term the EU will focus on keeping energy affordable for the many households and businesses that rely on it. In this context, Von der Leyen introduced a price cap on the revenue of companies that generate electricity with low costs and asked fossil fuel business for a solidarity contribution, which would be distributed across society. Also, households and businesses have been addressed to reduce electricity consumption by 10% during peak hours. The implementation timeline of these measures remains unclear and is hard determine considering the different structures of the electricity market in EU countries.

Long-term

In the long-term the EU will focus on renewable energy production as stipulated in the Green Deal. In this light, Von der Leyen introduced a Task Force to investigate how we can have reasonably lower prices for gas. Referring to the Commission’s REPowerEU proposal that aims to produce both 10 million tons of domestic renewable hydrogen production and 10 million tons of H2 imports by 2030, Von der Leyen raised specific attention to hydrogen and introduced the European Hydrogen Bank. This Bank will use money from the Innovation Fund to contribute 3 billion euros to construct a hydrogen economy. A sign that the European Commission is committed to develop an EU hydrogen market, possibly alongside investments done via the IPCEI instrument.

Securing critical resources

With the current energy crisis, comes investment. Von der Leyen highlighted the importance of Next Generation EU called for investments both in sustainability and to invest sustainably and. Also, the question of access to raw materials was elaborately discussed. The President went as far as to say that access to raw materials such as lithium and rare earths would become more important than oil and gas. Therefore, the EU would need to avoid becoming independent to one country which the EU currently aims to realize by the Global Gateway plan. Also, Von der Leyen announced the upcoming Critical Raw Materials Act, that would hopefully follow the “success of the Chips Act”, of which the legislative process is still ongoing.

Health

While health policy is generally not one of the competences of the EU under the Treaties, this year’s SOTEU made references to the EU’s efforts in the field, a sign of the Commission’s ambitions to become more important here. Von der Leyen praised the initiative of two production facilities for vaccines in Africa and discussed similar initiatives in Latin America. Beyond the references to Covid-19, she specifically addressed the mental health challenges a large portion of the EU population is facing. She introduced a new initiative on Mental Health, which will focus on the accessibility, affordability, and appropriateness of support.

Von der Leyen closed the speech with a long-awaited call for a new European Convention, which was met with a loud applause.

Which companies will be switched off from gas? And how is that determined?

That there is a gas crisis is clear to everyone. However, the picture becomes more diffuse when the crisis reaches its peak. How should the Netherlands deal with gas shortages and can vital infrastructure be saved? Rob Jetten – the minister for Energy and Climate Policy – will come up with an advice on these matters and has already started consultations with stakeholders. The exact outcome of this advice is not yet known.

The action framework to address a gas crisis is determined by the Gas Protection and Recovery Plan – based on an EU regulation – and includes eleven measures. At some point, if an emergency phase has been declared, non-protected customers may be forced to switch off from gas supplies in order to save protected customers. Protected customers are households and organisations with a social function such as hospitals, and non-protected customers are, for instance,the chemicals and metals industry.

If the current Gas Protection and Recovery Plan is followed, non-protected customers can be switched off based on consumption volume: the largest customer switched off first, then the second, and so on. This takes no account of social and economic consequences because, as the plan itself states, criteria to make a ranking would be subjective. Whether this will continue to be the case is under discussion.

At EU level, it was decided this summer to update the national gas crisis plans. Consideration was given to the possible disruption of society and the economy if certain industries were to be switched-off from gas. This is explicitly an advice – knowing that there are no easy solutions – which means that the Netherlands does not have to follow this consideration.

The minister for Energy and Climate Jetten is currently working on the further operationalisation of the Gas Protection and Recovery Plan. Part of this is determining who exactly are protected and non-protected customers, and in what order non-protected customers will be switched off, if necessary. This could lead to much discussion among stakeholders. After all, switching off will be a disaster. Not only for the company in question, but it also impacts other parts of the supply chain. Several companies have recently stopped production due to extreme energy costs. This casts a shadow ahead.

Minister Jetten has stated that he prefers to focus on voluntary gas savings. One important way of doing this is to develop a gas tender – one of the eleven measures. In this tender, companies can indicate in advance the price at which they wish to renounce consumption of a specified quantity of gas for a specified period. The details are still being discussed. The review of the entire plan is expected to be completed by 1 October. It will then be debated in the House, which may offer room for refining.

The Netherlands is currently still in the first phase of the gas crisis, the early warning phase. The gas reserves are at the desired level and gas consumption is reducing. Nevertheless, a sense of urgency is in order. History shows that the course of crises is difficult to predict. In addition, any ranking of industries may be a blueprint for other crises. It is therefore very important for the companies in question to anticipate these developments. This means that they need to be well informed about the latest developments. It can then be decided how they can provide input into the decision-making process – to ensure that their voice is heard.

How do we manage the large flow of policy documents?

Since 1 July 2021, the cabinet has made the underlying departmental decision notes public. This was prompted by the report ‘Unprecedented Injustice’ by the parliamentary committee inquiry into childcare benefit, which stated that the provision of information to parliament must be more adequate, open and complete. It is part of a trend where more and more policy documents are made public. This flow of data must ensure transparency in policy choices. For anyone who follows ‘The Hague’ for work, however, this is becoming an ever greater challenge.

It seems that not only are ministerial letters being written, external investigations being carried out and underlying policy documents being released more and more frequently – the volume is also increasing. Digitalisation has played a huge part in this over the past ten years. This also means that the now twenty political parties in the House of Representatives have quite a bit of work to do to analyse this and to monitor the government. The same applies to the media – which also have a monitoring function – and interest groups. Sometimes, a decision made in The Hague turns out to be impossible for a municipality, organisation or company. Due to the large stream of letters, memorandums, parliamentary questions and reports, it happens more and more often that documents are not read or read too late.

Robots do the work?

To keep track of this flow of documents and to have a filter on it, we increasingly leave the work to artificial intelligence, including some algorithms. They are the first filter and make the flow of data manageable for those who know what to look for.

Thanks to the efforts of the Open State Foundation, more attention is being paid to access to policy documents. Municipalities still use a patchwork of systems, but even there more and more documents are public. The House of Representatives itself has also ensured that all documents are easily accessible and that debates can be followed and watched online. This transparency and open data also lead in this case to even more documents and even more data. Using algorithms, we can make this somewhat manageable, but therein lies a risk.

Context

The risk of political monitoring with artificial intelligence is the lack of context. Not only the context of the policy memorandum or the parliamentary letter, but also of the user himself. The user’s own situation is also subject to topicality, as a result of which news that was previously not interesting (and which was therefore not clicked on) suddenly becomes very important.

All tools that help make large data streams manageable can be a good addition for anyone following the political arena. In ‘Brussels’ everyone knows POLITICO. But be aware of the limitations of automated tools. There is always a blind spot, just like with humans. That’s why Public Matters has chosen a combination in which digital tools (such as InfoMatters) help to filter information, but a consultant always pays attention to the ‘Brussels’ or ‘The Hague’ context and the client’s current affairs. This way, we not only share the information, but also advise directly when action is needed.

Would you like to know more about the monitoring of ‘The Hague’ & ‘Brussels’ developments and our unique system InfoMatters, with which you are always up to date with political-administrative developments? Please contact us or visit this page for more information.

Reform of international tax system not a done deal

Led by the Organisation for Economic Co-operation and Development (OECD), 136 countries that together represent about 90 percent of the total global economy reached an agreement on reforming the international tax system (the “OECD agreement”) in October 2021 after years of negotiations. Among other things, the countries – including the Netherlands – agreed that large multinationals will pay at least 15 percent profit tax, regardless of the country in which they are based. Although politicians indicated that they wanted to implement this agreement quickly, progress is currently faltering staggering on all sides.

This blog outlines what has happened since October 2021. Furthermore, it examines the most recent policy developments and their implications. Can we expect any changes soon, or will the ambitious OECD agreement fizzle out?

 

An important milestone

The OECD is a socio-economic partnership of almost 40 countries, including the Netherlands. Together with the G20, the OECD has established the so-called OECD/G20 “Inclusive Framework on BEPS” (“Inclusive Framework”). This consists of more than 135 countries and jurisdictions to encourage cooperation on “Base Erosion and Profit Shifting” (“BEPS”). Among other things, this focuses on tax avoidance, international tax rules and transparency.

Until recently, one issue remained unaddressed: a solution to the challenges that the ever-increasing digitalization of the global economy poses to the taxation of multinational companies. Think of digital companies doing business from a distance. While the reform was originally aimed specifically at companies operating in the digital economy, the final agreement is generically designed and relevant to all companies of significant size. The agreement is based on two separate pillars, with the ambition of implementing both pillars in 2023, each with its own objective:

  • Pillar 1 regulates a different distribution of profits and tax rights between countries for multinationals. The aim is for countries where these multinationals have customers or users to be able to levy taxes. Even if the multinational has no physical presence in the countries concerned (such as digital companies). Proposals for the implementation of this pillar are still awaited, postponing the implementation date to at least 2024, as the OECD is still in the process of drafting model rules.
  • Pillar 2 introduces a global minimum tax rate of 15 percent for multinational companies with annual sales of 750 million euros or more. On December 20, 2021, the OECD published model rules for implementation of this pillar and is therefore the part that has been discussed in recent months with regard to implementation.

Cabinet Rutte IV wants to get rid of the image of the Netherlands being a tax haven

The Netherlands is positive about the tax reforms. According to Marnix van Rij, State Secretary for Finance and responsible for Fiscal Affairs and the Tax Administration, the Netherlands is currently making efforts within the Inclusive Framework to develop and implement Pillar 1. In addition, the current cabinet wants to take away the image of the Netherlands as a tax haven and take a leading role within the EU in tackling tax avoidance. The cabinet is committed to the successful introduction of the minimum tax rate. However, several political parties, including the CDA (Christian Democrats), VVD (Liberal Conservatives) and GroenLinks (Greens), expressed their concerns about the financial consequences and the effects on the regulatory burden for businesses and the Tax Authorities, among others. The CDA questioned for example the complexity of the proposal and the feasibility of the timeline. Nevertheless, a majority in the House of Representatives supports the importance of the proposal, also in view of its cross-border nature.

 

European quarrels: still no agreement on Pillar 2

On December 22, 2021, the European Commission published the draft Directive for the introduction of the minimum tax, the second pillar. France, which took over the Presidency of the Council of the European Union from Slovenia on January 1, 2022, included this as one of its policy priorities. However, an agreement on tax legislation is subject to the principle of unanimity. This principle means that unanimity is required in the area of tax legislation, but also for decisions on foreign policy and EU membership. Therefore, in this case, the unanimous agreement of all 27 EU Member States is required.

After Budapest, Tallinn and Stockholm agreed to the EU proposal after some adjustments, including a change in the implementation date of Pillar 2 to 31 December 2023, only Warsaw still opposed. The reason for this refusal was not so much the plans regarding Pillar 2, but rather that Brussels had refused to approve the Polish COVID-19 recovery plan. When concessions were made in early June, the Polish Minister of Finance, Magdalena Rzeczkowska, also withdrew her veto.

Just when an agreement was on the table, a few minutes later Hungary unexpectedly and to the great displeasure of the other Member States, used its veto, where previously no objections had been raised. Budapest has been at odds with Brussels for years over a rule of law dispute. The Dutch Finance Minister, Sigrid Kaag, called Hungary’s action “remarkable.” Prime Minister Rutte also complained about the sudden resistance. To put it diplomatically: patience with Hungary is running out.

Whatever Hungary’s intentions may be, for the time being, it will probably not succeed in luring the EU into a successful compromise as Poland did. ‘Brussels’ saw advantages in a rapprochement with Poland, given the country’s economic and security issues as a result of the war in Ukraine. That compromise led to outrage in the Commission itself – two vice presidents voted against it – and to critical questions from the European Parliament and Member States. This makes it unlikely that the Commission will compromise with Hungary – a country that is even more deficient in the rule of law and regularly obstructive when it comes to European policymaking.

Reform is still a long way off

Partly due to the blockades by Poland and Hungary, the discussion on the principle of unanimity and the right of veto on tax legislation within the EU has flared up again. The European Commission wants to change decision-making to qualified majority voting for non-controversial legislation regarding tax policies, such as administrative cooperation and the fight against tax fraud and avoidance. However: to change this, consensus is also needed. For instance, the Netherlands is currently not in favour of abolishing the unanimity rule for fiscal policy.

Meanwhile, on the other side of the ocean, an agreement on taxes, climate, and health care (the so-called “Inflation Reduction Act”) was being negotiated in the US Senate. The blockade of Hungary was greeted with applause by the Republicans. Eventually, the “Manchin-Schumer Deal” was reached, including compromise legislation on the minimum profits tax. One problem: the proposed minimum tax incorporated into the Manchin-Schumer deal is not consistent with the OECD agreement. With all the implications for an uneven playing field. This creates the risk of other countries withdrawing from the OECD agreements. It has also led to concerns that multinationals will face a web of complex and inconsistent tax regulations.

All in all, it seems that real reform is still far ahead of us. The success of the new legislation will largely depend on how the plans are worked out: the tax devil is in the details. Pillar 2 appears to be a tough process, while Pillar 1 has yet to follow. Either way, the reform will require intensive multilateral cooperation and great commitment from multinational corporations. The political struggles, the technical details and the consequences for the regulatory burden make this an extremely complex project.

Public Matters advises companies and other organizations that are indirectly / directly affected by the impact of the reform of the (international) tax system and other tax legislation. Please check this page for more information or contact us.

EU Presidency of the Czech Republic: ‘Crisis President’

On 1 July, 2022, the Czech Republic took over the Presidency of the Council of the European Union from France. Every six months the Presidency of the Council changes and is it the turn of a different Member State. The Czech Republic will work under the slogan “Europe as a task: rethink, rebuild, repower”. In this blog Fieke Creijghton and Valérie Mendes de León look ahead to the EU Presidency of the Czech Republic for the next six months, and with which priorities the Czech Republic will take on this task.

Starting position

In the midst of several crises – the Ukrainian crisis, the climate crisis, the Corona crisis, the energy crisis and rising inflation – POLITICO crowned the Czech Republic as ‘crisis president’. The central European country is expected to focus on mediating these crises. In addition to external challenges, the Czech Republic will also have to prove itself at home. For example, a recent poll by a Czech research firm showed that only 36 percent of its residents is satisfied with the European Union. Among other things, this has caused the Czech Republic to be Eurosceptic in the past. A combination of rising domestic trust and its geographical location between Hungary and Poland makes for an interesting starting position during this presidency.

In addition, the current Czech government consists of a coalition between several European coalitions. With the coalition of conservative liberals (“Together”) and center-left liberal coalition, the Czech coalition parties are represented in no less than three different European political groups of the “Greens,” the “EPP,” and the “ECR”. The internal differences within the Czech coalition couldcause tensions.

Priorities

Central in the Czech Presidency, led by Prime Minister Petr Fiala, is the Russian war in Ukraine. Both the Czech Republic and the EU have indicated that peace in Ukraine is imperative in the coming months. Specifically, the presidency has stipulated five priorities:

  • Rebuilding Ukraine and coordinating the refugee crisis caused by the Russian invasion;
  • Energy security;
  • Strengthening European defense capabilities and cyber security;
  • Strategic resilience the European economy;
  • Resilience of democratic institutions.

Regarding the tensions in Warsaw and Budapest, the new Presidency wants to ensure that all Member States are included in a constructive dialogue.

Energy Transition

One of the Presidency’s priorities concerns ensuring energy supply and energy transition. The Czech Republic wants to build on the European energy infrastructure and strengthen the resilience of the European energy supply. The Czech Republic aims to do this by increasing the role of nuclear energy. In parallel with implementing this vision, Prague has the difficult role of maintaining short-term energy supplies for the winter of 2023, without becoming dependent on long-term fossil fuel contracts. In order to achieve this, the EU has recently adopted the ‘Gas Storage’ proposal, the REPowerEU plan and the plan to jointly purchase gas. It is expected that the Czech Republic will put pressure on progress in these policy areas.

Tech

Within the digital policy domain, two priorities includeincreasing cyber security and making Europe’s economy resilient. The Czech Minister for Digital Affairs, Ivan Rakušan, indicated in an interview with Euractiv that he wants to continue where France ended. Thus, the Czech Republic will take on the implementation of the Digital Markets and Services Acts. Also, the Czech Republic wants to prioritize the AI Act and the creation of the framework for a European Digital Identity. Parallel to the third priority, the goal of reducing technological dependence on countries outside the EU has also been set to counter cyber threats.

In an interview with the Czech magazine Leaders, Czech European Affairs Minister Mikulàš Bek said that in these times of crisis, the priority above all is the daily management of the European Union. The Presidency of Europe as a Task will be mainly about that: accomplishing day-to-day tasks to lead the Union through the crises.

The Czech Republic will hold the Presidency until the end of 2022; in 2023 it will first be Sweden’s turn and then Spain. Do you want to look ahead to the Presidency of these Member States? Or are you curious about how your organization can act upon the Presidents’ priorities? Please do not hesitate to contact us!

Nitrogen crisis puts provinces on lobbyists’ map

The Netherlands has a remarkable number of provinces for a country of its size. Just compare it to Canada. The second largest country in the world has 10 – plus 3 so-called territories. Someone arriving in the Netherlands for the first time might think that the Dutch attach great value to this layer of government. This should be the case in view of the nitrogen issue – and other environmental matters such as permits – but it is not evident from the ballot boxes, for example. Turnout in provincial elections has fluctuated between 45 and 55% since the early 1990s. One reason is that voters don’t have a picture of what the county does. Advocates do or will soon have that in mind.

In the coming period, until after the provincial council elections in March of next year, the province must develop far-reaching policies to reduce the emission of nitrogen drastically on the instructions of Minister Van der Wal-Zeggelink (Nature & Nitrogen). This has consequences for livestock farming, which emits the most ammonia, as well as the industrial, mobility and construction sectors. The latter are underexposed in the media frenzy, but that does not mean that they remain out of range.

The Minister of Nature and Nitrogen is working on a national plan to reduce the other nitrogen source, nitrogen oxides, for which the mobility, industrial and construction sectors are held primarily responsible. Nitrogen oxides blow out further than ammonia, that one ‘nitrogen leg’, and that makes national measures more logical. The provinces can, albeit to a lesser extent, still turn the knobs in the implementation. They will try, because the social tensions are enormous. The ominous comments that nature would not be sufficiently helped even without livestock farming do the rest.

By the way, industry can also be called to task with regard to ammonia emissions. In the National Programme for Rural Areas, Nitrogen Minister Van der Wal-Zeggelink has set the provinces clear targets for reducing ammonia emissions. Because the majority of these emissions come from agricultural sources, the minister feels that the reduction must come primarily from this sector – but not alone. Industry with a permit sometimes emits ammonia near nature reserves and can also have reduction targets imposed on it.

Not everything is set in stone yet. The provinces must provide customization and the ammonia targets can still be adjusted somewhat, for example as a result of measures to reduce nitrogen oxides. The switch from fossil fuels to renewable energy can help with the latter but will take time. Especially when you consider that Limburg and North Brabant, both with a hefty nitrogen task, have announced a temporary halt on new or heavier electricity connections because there is insufficient capacity.

If someone lands in the Netherlands next year after the election, their perception could just be right. The province suddenly matters and it is buzzing with political activity. Advocates will want to make their mark on nitrogen policy.

Photo by Petr Ganaj