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European Commission

Algirdas Šemeta

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

Tax evasion and avoidance: time for ambitious actions

European Parliament Economic Committee on Taxation/ Brussels

7 May 2013

Ladies and Gentlemen,

I am very happy to be here with you today.

I would like to start by thanking the European Parliament for its work in the field of tax policy.

I have followed with great interest your recent debates on Mrs Kleva's report on the fight against tax fraud and tax evasion.

If you agree, I will focus my introduction for our debate today on this issue, given current developments both at EU and global level, and the great expectation for progress in the next few days in Council.

However, I would not like this issue to overshadow the importance of maintaining pressure on our Member States to improve the quality of their tax systems. I firmly believe that the tax dimension of the European Semester remains an essential element of our strategy for growth and jobs.

In this context, I am happy that the European Parliament maintains the tradition of an annual tax report and I would like to congratulate Mrs Gall-Pelcz for her work as rapporteur.

As you know, the European Commission is currently analysing the National Reforms Programmes of the Member States with a view of issuing Country Specific Recommendations at this end of this month. Your annual tax report will constitute an important element in our work.

I would also like to take a moment, here at the beginning, to express my appreciation for Mrs Podimata's work on our legislative proposal for a Financial Transaction Tax under enhanced cooperation.

The discussions on this are on-going in Council. As Member States reach the heart of the debate, notably on the scope of the tax, we are seeing very strong lobbying by the FTT's opponents.

I want to reaffirm my conviction in this essential and fair tax and urge the group of 11 Member to progress towards a consensus. They must converge on a solution soon, to avoid unnecessary speculation on the future of this project.

Let me now turn back to the issue of tax fraud and tax evasion.

The last time I addressed you in this Committee, in November 2012, it was to announce our forthcoming action plan on tax fraud and tax evasion.

In presenting it, I had one strong conviction:

Member States' consolidation efforts, which need to be sustained, can only be accepted by our businesses and citizens if they are seen to be fair and equally shared. For that reason, it was essential to put more emphasis on tapping into the huge pot of uncollected taxes which escape the public purse through fraud or evasion.

However, at that time, I was still struggling to get the majority behind this cause, and was trying to create a pressure that would prevent no-action becoming the policy in this area!

Little did we know at that time, how recent developments would push this issue to the very top of the political agenda and how timely the initiatives that the Commission had put on the table would be.

I believe here that we can praise the impressive work of the International Consortium of Investigative Journalists for their much documented work which led to the Offshore Leaks report. It has certainly played a role in focussing minds in the right direction.

What matters now is to make the best use of this momentum to progress.

Today I welcome the opportunity to take stock of where we are and to outline how I see us reaching where we want to be.

First, it is time for concrete and ambitious actions.

I don't think there is anyone today who would deny that the need for concrete action in this field is needed.

It was already identified by EU leaders in the March 2012 Summit and recent developments in our Member States and globally have simply confirmed this need.

It is the reason for the EU Action Plan against tax fraud and evasion, which I brought forward last December.

If fully implemented, this Action Plan can dramatically improve our chance of eliminating these pervasive problems, and return hundreds of billions of euro back to the public purse.

The priorities are clear, and as I understand, are shared by your Committee: enhance information exchange within the EU, improve mutual assistance between Member States, tackle the mismatches that evaders exploit, and clamp down on tax havens.

In fact, our Action Plan contains the full spectrum of measures needed to create a much more hostile environment for fraudsters and evaders across Europe.

Some measures are subject to new proposals from the Commission: these will come in the near future.

But most of them are already on the table of the Council. They must be agreed and applied by our Member States without delay.

We have heard many ambitious words on fighting tax evasion in recent weeks.

On the 14 May, EU Finance Ministers will have the chance to turn these words into action – and there is no excuse not to do so.

Second, it is time for stronger coordination at European Level.

For me, coordination is the linchpin, which will determine the success of our efforts to combat fraud and evasion.

Tax evaders thrive on the mismatches and misgivings that exist cross-border. It is only by coming together that we will finally bring this problem down.

Up to now, I'm afraid that the appetite for full and unreserved coordination has been lacking amongst the Member States. And as a result, fraudsters and evaders have been able to use our Single Market as a playground for their activities.

Moreover, Member States' inclination to put national tactics before the EU approach has diminished our collective impact on the international stage.

We should not forget that the EU is a global forerunner in tax good governance. We've been ahead of the crowd on issues like automatic exchange of information and fair tax competition.

So it is really a pity that we lacked the strong and coordinated stance to push these standards more forcefully at global level.

This has to change – and I believe that it will.

I am happy that the current Presidency has showed genuine interest and has worked in the Council to coordinate positions on key tax evasion files so far.

It is essential to progress in the EU but also globally, in view of the forthcoming discussions in the G20, notably on fighting base erosion and profit shifting.

I would like to remind here that the CCCTB could substantially contribute to reducing excessive tax planning and avoidance schemes. Discussions in the Council on this file must pick up pace and move forward as quickly as possible.

On our side, we have recently created a platform for tax good governance, to ensure coherent and decisive actions by Member States.

It is only by acting together as a Union that we will be a model of good governance at home and a powerful driver for these same standards to be applied internationally.

My third and last point is that there is no exclusivity in the fight against tax fraud and evasion.

The task is huge. Fraudsters and evaders have no borders, nor do they lack resources and ideas. As a consequence, any initiative, be it at national, EU or international level, which pushes things forward more quickly, or which increases ambition on what must be achieved, is very welcome.

In this context, the pilot project recently launched by 5 Member States could accelerate our collective move towards more automatic exchange of information and greater transparency.

In this respect, it is something I can very much support as there is clearly room for more ambition in this field.

We must address the need to bring forward and extend the wider scope of automatic exchange of information, beyond what is currently agreed.

We must proceed with ambition – but at the same time we must do so within a community framework.

Why? Because a Single Market needs a single approach.

We need it to ensure solidarity between all Member States, so that one nation's tax policies are not undercut by another's.

We need it to ensure a level playing field for businesses, so that one company does not end up paying for another's abusive tax planning.

And we need it to create a fairer environment for our citizens whom are carrying a heavy tax burden due to the crisis.

You can be sure that the Commission will fully play its role and will shortly propose how to strengthen the EU framework for automatic exchange of information.

Let me conclude now by sharing with you how I see the way forward.

We need decisive action, and we need it now.

The current energy amongst Member States to step up the fight against tax evasion must be harnessed, and turned into concrete deliverables.

On 24 April, together with the Irish Presidency, I sent a letter to all Finance Ministers, setting out the measures which they must urgently adopt.

These include, inter alia, the comprehensive Action Plan which I have already spoken about, a stronger EU Savings Directive and negotiating mandates to push our neighbours towards greater transparency, and the VAT anti-fraud package.

Next week's ECOFIN, and the Summit that follows, offer our Member States a unique opportunity.

They will have the chance to take decisions which will help recover vast sums to national treasuries and rebalance the tax burden for citizens.

Decisions which will be remembered as a major turning point in how we deal – as a Union – with tax evasion and those that encourage it.

Finally, decisions which will safeguard Member States' right to implement the tax policies that they need, in an environment of fair tax competition.

Let's hope that, as a Union, we will not miss this opportunity!


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