EU Launches Assault On 'Harmful' Taxes
Tuesday, April 5, 2011
Speaking at the 'Workshop on the Outlook for Financial Markets, for their
Governance and for Finance,' the EU Commissioner for Taxation, Algirdas Šemeta, disclosed that the European
Union, as part of a three-point plan to tackle member states' debts, will
increase their assault on 'harmful' tax regimes.
He told attendees:
"Today, our member states are facing huge challenges in their efforts
to consolidate their public finances. Consolidation by cutting expenditure is
of course essential. However this will not be enough given the magnitude of
the deficits, and raising taxes has or will have to be considered."
"In this context, member states have to care for the quality of their
tax systems. They need to define how best to raise revenues while providing
the right incentives for employment, innovation and long-term investment. They
must also ensure that their tax reforms are resistant to economic fluctuations
and do not rely too much on tax bases that are very cyclical or known to be
prone to bubbles."
After discussing possible tax policies for European nations, and the diversification
of member states' tax bases, Šemeta discussed the importance of
tax coordination, to ensure that member states preserve their "legitimate tax
base and revenue."
"This is all about tax competition, tax fraud and tax evasion,"
the Commissioner said.
"Tax competition is accepted, and may even be a good thing, as long
as it does not endanger the capacity of member states to collect the revenue
that they would fairly expect."
"The Code of Conduct on business taxation is our tool to ensure that
this principle is respected in the EU and beyond. It is a soft law instrument:
under a peer-review process, member states examine their potentially harmful
business tax measures and commit to correct them."
"It has proved useful in the past. It is not ambitious enough anymore. There is a need to find renew[ed] support on
the principles at political level and to sharpen our instruments. In this period
of intense consolidation efforts, no margin of manoeuvre exists: transparency
and trust is the standard and no one can steal a tax base or tax revenue from
its neighbour. And let me emphasize that this principle is also valid in our
relations with third countries."
"As for the fight against fraud and evasion, the EU agreed last year
that bank secrecy will no longer be a reason to refuse cross-border cooperation.
A dynamic approach on multilateral automatic exchange of information has now
"More is, of course, ahead of us. Where can we make progress?"
"VAT fraud continues to be an important problem: an estimated 12% of
VAT remains uncollected for this reason. The forthcoming VAT strategy will concentrate
on finding a fraud- proof system."
"Member states should also quickly find an agreement on the improvement
of taxation of savings in Europe and on anti-fraud and tax cooperation agreements
with neighbouring European states that are not within the EU is also needed
"Finally, at global level, we will pursue our fight for more tax transparency.
In this context, a tougher common European approach should be agreed on the
treatment of non-cooperative jurisdictions and tax [havens]," Šemeta concluded.