Richard Cornelisse

Algirdas Šemeta EU Commissioner – Press Conference ECOFIN Council Brussels, 15 May 2012

In Tax News on 26/05/2012 at 8:06 am

Algirdas Šemeta EU Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Statement on Savings Tax Agreements and VAT strategy

I am extremely frustrated that we could not reach agreement today on the mandates to negotiate new and stronger savings tax agreements with Switzerland and the 4 other third countries.

Let me remind you what is at stake here.

These mandates would give us a chance to strengthen our common instruments against tax evasion.

They would open the possibility for new sources of revenue for Member States. Revenues which they are legitimately due. And revenues which they badly need.

This proposal has been on the table for almost a year now. I need not remind you that during the same year, law-abiding citizens have been bearing the brunt of austerity so that budget shortfalls can be met.

Tackling tax evasion is a growth-friendly way of boosting national budgets. How can any Member State possibly justify blocking progress in this area?

It is all the more puzzling given that, at the last Summit, EU leaders called clearly and unanimously for rapid adoption of the negotiating mandate.

I will be blunt.

The position that Austria and Luxembourg have taken on this issue is grossly unfair.

They are hindering 25 willing Member States from improving tax compliance and finding additional sources of income.

They claim that they are protecting their own national interests. This excuse does not stand up.

We are only seeking mandates to negotiate at this stage – to explore how much we can achieve with Switzerland and the other countries.

Any eventual agreement would have to be adopted unanimously. Austria and Luxembourg have every assurance that nothing will be signed without their full consent.

So their resistance against merely opening negotiations is completely unjustifiable.

I leave it to them to explain to citizens across Europe why they can support tax hikes and spending cuts for ordinary people, but won’t allow us to step up our fight against tax evaders.

On a more positive note, Ministers did endorse today the new VAT Strategy which I put forward last December.

This supports the calls from citizens, businesses and administrations for a complete overhaul of the current system. We must make the EU VAT regime simpler, more efficient and more fraud-proof.

If looking for the benefits of such a reform, the figures speak for themselves.

VAT currently accounts for over 20% of Member States’ income. So a better quality VAT system means better quality revenue.

Moreover, if we can address even 10% of the mismatches between Member States’ VAT procedures, we could see an increase in intra-EU trade of almost 4%.

In our VAT Strategy, we set out priority areas for action. These range from taking a fresh look at reduced rates, to creating new anti-fraud tools.

The Commission’s work is already underway on concrete deliverables.

I hope that I can rely on the Council for the same level of support as today when we present proposals for specific measures to improve VAT in Europe.

Comment

The EU Commisioner’s is frustrated about the position taken by Austria and Luxembourg and their defending arguments ‘claiming protecting their own national interests’.

This is what I wrote in ‘Green Paper on the Future of VAT‘ blog about the EU political challenge in general:

We don’t have to hurry as this will take a couple of years before this gets into force. It is all about politics and the right timing again.

Last but not least at the end the Council of all Ministers have to approve.  The real political challenge would be to first agree on and implement the ‘All for One and One for All’ principle.

A bottleneck could be the competition for tax revenues and the perception that somebody else wins. When somebody wins, somebody else must lose.

Related Topics

Richard Cornelisse worked as Big4 Partner in the Tax Performance Advisory and Indirect Tax Practice and now blogs on Tax Function Effectiveness and Tax Control Framework developments.

 

  1. […] Algirdas Šemeta EU Commissioner – Press Conference ECOFIN Council Brussels, 15 May 2012 […]

  2. […] Algirdas Šemeta EU Commissioner – Press Conference ECOFIN Council Brussels, 15 May 2012 […]

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  4. […] Algirdas Šemeta EU Commissioner – Press Conference ECOFIN Council Brussels, 15 May 2012 […]

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