{"id":16194,"date":"2012-06-27T16:20:07","date_gmt":"2012-06-27T15:20:07","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=16194"},"modified":"2012-06-27T16:48:01","modified_gmt":"2012-06-27T15:48:01","slug":"the-eu-recognises-tackling-the-tax-gap-is-key-to-europes-recovery","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/06\/27\/the-eu-recognises-tackling-the-tax-gap-is-key-to-europes-recovery\/","title":{"rendered":"The EU recognises tackling the tax gap is key to Europe’s recovery"},"content":{"rendered":"

It's rare for\u00a0Tax Research UK to host guest posts, but Naomi\u00a0Fowler, producer of the\u00a0Tax Justice Network Taxcast<\/a> just produced the\u00a0following\u00a0blog for me and I'm delighted to share it (and you can follow on Naomi on Twitter @Naomi_Fowler):<\/p>\n

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The European Commission seems to be getting serious about tax fraud (press release here<\/a>). It\u2019s just released proposals<\/a> on \u2018concrete ways\u2019 to \u2018reinforce the fight against tax fraud and tax evasion.\u2019 It\u2019s not surprising. Half of the EU Member States are either in stagnation or in decline in the first quarter of this year with dismal prospects for economic recovery since most governments seem signed up to an utterly self-defeating austerity agenda. As the Commission so rightly points out in today\u2019s press release \u2018Member States need every euro that they are due for fiscal consolidation and to rebuild their economies.\u2019 Yes, they do. Whether they know how to rebuild their economies is another matter.<\/p>\n

As the Tax Justice Network has been pointing out for many years, the figures are truly staggering. The EU is losing around a trillion euros a year because of tax evasion and avoidance. The shadow economy as a whole is estimated to be nearly a fifth of GDP on average across Member States - that\u2019s around 2 trillion euros. There's an additional tens of billions stashed offshore unreported and untaxed.<\/p>\n

The Commissioner for Taxation, Customs, Anti-fraud and Audit, Algirdas \u00c5\u00a0emeta says: \u201cLet there be no illusion: tax evaders steal from the pockets of ordinary citizens and deprive Member States of much-needed revenue. If we want fair and efficient tax systems, we must stamp out this activity.\u201d<\/p>\n

Then he goes on to say: \u2018If we play as a team, with a common strategy, we can defeat the fraudsters and evaders, and reclaim vast sums of money that are legitimately due.\"<\/p>\n

The \u2018playing as a team\u2019 bit is quite interesting. While it\u2019s a bad idea for member states to have centrally controlled economic policies, it\u2019s imperative that they do cooperate when it comes to tax enforcement. We\u2019ve seen what happens when countries negotiate individually with predatory tax havens like Switzerland \u2014 Greece has come out of it with a very poor deal for its citizens. (Estimates of Greek money hidden in Switzerland alone is 600 billion euros. Imagine a proper tax on that little lot.) The UK negotiated its own deal with Switzerland too and will forfeit large amounts of tax revenue it could have collected under a better agreement. And of course, there\u2019s no question of prosecutions or any serious consequences for those caught hiding their money by these new deals.<\/p>\n

As the Commission puts it \u2018Only when Member States are prepared to assist each other can they expect to reap the full benefits of cooperation.\u2019 Quite. Negotiating individual deals with Switzerland was hardly assisting each other and it certainly wasn\u2019t \u2018reaping the full benefits\u2019. The implementation of the Savings Directive shows how beneficial cooperation can be - over 4 million records a year on savings in accounts held by non-residents are now sent to the tax authority of their country of residence. These are people who were presumably trying to avoid tax by banking their cash in places like Switzerland, Andorra, Monaco, Lichtenstein and San Marino. An average 20 billion euros has been taxed this way. Now the Commission wants to strengthen the existing Savings Directive by amending it to catch in the net the use of untaxed intermediary structures to obscure beneficial ownership and other fluid and \u2018innovative\u2019 financial wizardry devised to escape taxes.<\/p>\n

So what else does the Commission have in mind? Among their proposals are to improve tax collection systems within each Member State and to have better cross-border cooperation between Member States' tax administrations. They say they want to \u2018promote\u2019 automatic exchange of information \u2018where it is the most useful\u2019. I\u2019m not sure what situation they might have in mind where automatic information exchange would not be useful\u2026<\/p>\n

They\u2019re also talking about assigning a European Tax Identification Number to every taxpayer engaged in cross border activity, giving Member State tax administrations direct access to each others national data bases and having teams of auditors dedicated to cross-border tax fraud.<\/p>\n

It\u2019s interesting to hear that in places like Switzerland they are actually running out of space for safety deposit boxes, such is the demand for them. The Commission expresses its concern that non-banks in the Cayman Islands and Switzerland alone represent almost 20% of all worldwide deposits by non-banks (with a total of $1352 billion deposits). Of course, they want to stop third countries undermining advances in tax enforcement within the EU. They want swift approval to talk about making a deal to Singapore, Hong Kong and Macao. That'll take a lot of persistence...<\/p>\n

The Commission wants to ensure \u2018EU partners under international trade and cooperation agreements will commit to good governance principles in the tax area.\u2019 Hmm. I don\u2019t think a place like Singapore has the slightest intention of committing to good governance principles any more than Switzerland does. But, the Commission believes there\u2019s now a strong political will to take the \u2018concrete\u2019 action it\u2019s proposing. It'll be interesting to see how concrete those steps really are.<\/p>\n","protected":false},"excerpt":{"rendered":"

It’s rare for\u00a0Tax Research UK to host guest posts, but Naomi\u00a0Fowler, producer of the\u00a0Tax Justice Network Taxcast just produced the\u00a0following\u00a0blog for me and I’m delighted
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[],"class_list":["post-16194","post","type-post","status-publish","format-standard","hentry","category-tax-gap"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/16194","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=16194"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/16194\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=16194"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=16194"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=16194"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}