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European Commission

Algirdas Šemeta

Commissioner responsible for Taxation and Customs Union, Audit and Anti-fraud

Statement on the 2013 Annual Growth Survey: Towards fair and competitive tax systems

Press Conference / Brussels,

28 November 2012

Ladies and Gentlemen,

The central role of taxation in the EU's economic recovery is well established.

We know that our consolidation and growth agenda relies on quality revenues.

And that these, in turn, rely on smart tax policies.

This time last year, I set out 5 key objectives for Member States' tax systems, to underpin sustainable growth and successful consolidation.

These objectives served as the basis for the country specific recommendations adopted in June.

To briefly recap, Member States should:

  • Shift taxes away from labour

  • Increase environmental taxation

  • Broaden tax bases

  • Reduce the debt bias

  • And improve tax collection and compliance

I am pleased to say that these recommendations have been taken on board in many national tax reforms, albeit to varying degrees. However, the race is far from run. There is still a long way to go.

For example, our latest analysis shows that 1/3 of Member States could do more to shift taxes away from labour towards consumption, environment or property.

I fully appreciate that tax reforms – especially sustainable ones – do not happen overnight. They must be carefully devised and diligently implemented.

For that reason, I advocate today a consistent approach. The same 5 objectives should continue to guide Member States' tax policies, and be integrated more intensively into national reforms.

Added to this, I would urge Member States to place greater focus on 2 core principles for quality taxation: competitiveness and fairness.

These should be the bedrock upon which all tax policies lie.

What makes a tax system competitive?

Not the tax rate alone, as is sometimes believed. Equally important are the ease of compliance, the level of administrative burden and the stability of the system.

And what makes a tax system fair?

Member States being able to collect the taxes they are due and all taxpayers paying their legitimate share. The burden should be spread in an equitable way, as should the benefits of the tax.

Despite a common misperception, competitive taxation and fair taxation are not mutually exclusive.

In fact, in well-designed tax systems, these principles support and reinforce each other.

Let me give you an example.

A tax shift away from labour creates a more attractive environment for business and enterprise. This in turn encourages investment and boosts employment. It is good for the overall competitiveness of an economy.

At the same time, this measure can be shaped in order to limit the tax burden on low-paid workers and open up new job opportunities. As such, the positive effects are felt by the ordinary citizen, as well as by businesses. The impact of the tax policy is fairly distributed.

This is the balance that Member States must strive to achieve.

In parallel, greater coordination at EU level will reinforce national tax reforms and amplify their positive effects.

Together, Member States can become more competitive, by breaking down tax obstacles in the Single Market and addressing mismatches between national systems. The proposed Common Consolidated Corporate Tax Base is a good example of how an EU solution could dramatically cut costs and reduce red tape for businesses.

Together, Member States can also ensure more fiscal fairness. I already mentioned the need for greater national efforts to tackle evasion and avoidance. But given the cross-border nature of these problems, we must also draw on our collective strength to ensure a coherent and effective response at EU level.

With this in mind, I look forward to presenting, next week, a package of measures aimed at strengthening the common stance against tax evasion, tax havens and aggressive tax planning.

I also hope to see quick progress in authorising the financial transactions tax to move ahead under enhanced cooperation. The FTT is the epitome of fair taxation, as it would ensure the financial sector makes an equitable contribution to public finances. Eleven Member States are ready to move ahead with it. There is no good reason why they shouldn't be facilitated in doing so.

Ladies and Gentlemen,

Today I have set down the sign-posts which Member States should follow in implementing their tax reforms. There's no change in direction, but there should be increased momentum. Smart consolidation and sustainable growth will only come with quality taxation.

We know what has to be done. Now it's time to do it.


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