British Prime Minister David Cameron last week sent a letter to European Commission president Josè Manuel Barroso and European Council President Herman Van Rompuy urging EU leaders to advance steps already taken to deal with tax evasion.
Tackling tax evasion must be made a priority
Cameron’s plea comes ahead of the EU summit due to be held on May 22 in Brussels. One of the priorities of the summit will be to discuss the G8’s agenda to tackle tax evasion on a global scale.
One proposed measure to tackle tax evasion and avoidance is the rapid introduction of a multilateral automatic information exchange system on the data of overseas bank accounts. Cameron is expected to express his support for this measure as a new global standard at the EU summit.
He supports the proposal because he feels it will help increase transparency and prevent tax evaders from taking advantage of the loopholes in the various laws in different jurisdictions. He hopes the G8 summit scheduled to take place in June will advance the efforts and discussions of the May EU summit and raise international efforts.
Supporting this proposal is part of Cameron’s attempt to push forward the G20’s agenda on reforming tax rules globally. He also hopes to use the Organisation for Economic Cooperation and Development to introduce such global reforms.
Following the introduction of such reforms, companies would have to draft reports setting out the taxes they pay in each of the countries they operate in. This follows a recent agreement by EU member states setting down rules requiring banks to report on how much tax they pay on a country-by-country basis.
Last week, the European Parliament also took steps to continue tackling tax evasion. In the Parliament’s Economic and Monetary Affairs Committee, a report on the fight against fraud, tax evasion and tax havens was adopted. This step follows the recent Casa Report on a quick reaction mechanism against VAT fraud, which was adopted by the European Parliament in February.
EPP MEP Sirpa Pietikäinen has also urged the May EU summit to prioritise the automatic exchange of information on savings.
Austria is the last member state opposing the proposed measure. It is hoped a deal can be reached by the end of June.
According to the European Commission, tax evasion robs EU member states of €1 trillion every year. Thus, tackling tax evasion must be made a priority, especially in the current economic climate. The money recuperated from fraud, tax evasion and tax avoidance would greatly assist in boosting the economies of EU member states.
Efforts are being made not just to tackle tax evasion and fraud in the EU. It is hoped cooperation will go beyond EU member states and countries such as Switzerland, Monaco and Andorra will be able to harmonise their tax laws with EU tax laws soon.
To highlight the importance of tackling tax evasion, the European Commission has set up a new initiative: the Platform for Tax Good Governance. This initiative is part of the Commission’s action plan against tax evasion, which was presented last December.
The initiative will consist of a committee that will monitor the progress of member states in tackling tax evasion and tax havens. This committee is expected to meet for the first time in June 2013.
The platform has two main recommendations.
The first is developing a strong European stance against tax evasion. This involves greater cooperation between member states such as placing tax havens on blacklists.
The second recommendation promotes transparency and the closing the loopholes between jurisdictions. Reinforcing the anti abuse provisions in bilateral tax treaties is one way of achieving this.
David Casa is a Nationalist MEP.