Other available languages: none
[Check Against Delivery]
Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud
Speaking points by Commissioner Šemeta on the Country- Specific recommendations
Brussels, 2 June 2014
Ladies and Gentlemen,
If we want to create jobs in Europe; if we want to truly become competitive; then we absolutely need to bring down the cost of work.
And taxation is pivotal in that process.
Over 25 million people are out of work in Europe. Yet, with a tax wedge of 46.5% in the Eurozone, our tax burden on labour outweighs other OECD countries.
This figure must be reduced, especially for low income earners.
Following previous country specific recommendations, there has been some progress.
For example, 2/3 of Member States have introduced some kind of targeted tax cuts on labour.
However, much more remains to be done before we have a level of taxation that supports a job-rich recovery.
Therefore, we have recommended that Austria, Belgium, Czech Republic, Germany, France, Hungary, Italy, Latvia, Lithuania, Netherlands, Romania and Spain do more to shift taxation away from labour to less distortive tax bases.
This shift should be towards the 3 "P"s: Pollution, Property and Purchases.
Environmental taxation helps promote the green economy, thereby opening the way for new jobs and greater competitiveness.
Recurrent property taxation tends to be fair and effective, if done in a progressive way.
And there is ample economic evidence that consumption taxes can be extremely efficient revenue raisers, which don't damage growth.
However – and this brings me to my next point – the use of consumption tax in the EU is still far from ideal.
Across the Member States, VAT exemptions and reductions not only eat into the national intake. They also create administrative nightmares for our businesses, by complicating the system.
This is particularly true in Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, Poland and UK.
Overall, 11 Member States have been recommended to broaden their tax base for greater tax efficiency.
Let me be clear here. This does not mean that the standard rate must be pushed up.
A tidier and tighter VAT system in some of these countries might even leave space for the standard rate to be reduced.
And it would certainly create a more favourable environment for many businesses – thereby boosting competitiveness and investment.
Making life easier for businesses also means making it easier for them to comply with the tax rules.
A competitive tax system is one that combines efficiency and simplicity with fair burden sharing.
Therefore, today, we have called on 16 Member States to improve tax governance at home – to facilitate compliance by the honest, and to hamper tax evasion by the less honest.
In this context, we have paid particular attention to the issue of aggressive tax planning.
Even leaving aside the major issue of fair tax competition, there is a question of sustainable public finances here.
Major strides are being made to clamp down on corporate tax avoidance. And global tax standards are being restructured to counter abusive tax practices.
So Member States cannot rely on short-sighted tax schemes to attract multinationals.
And Europe, as a whole, will lose out if multinationals pick and choose from our Single Market purely to minimise their taxes.
With a unified approach, and dedication to follow through on all the necessary measures, Member States have every potential to deliver a real blow to tax evaders.
But to achieve that, political interest cannot be confined to campaigns. It must translate into with swift and decisive action, at national, European and international level.