27 April 2012

Commissioner Šemeta: Tax challenges and opportunities in an ever-closer Union

Commissioner Šemeta began his speech by presenting what he regards to be the priorities for Member States' structural reforms in order to ensure that tax policy contributes to recovery in the best way that it can. He then went on to highlight the importance of EU tax coordination.

In March this year, the European Council invited Member States to review their tax systems. And it defined the orientations: making them more effective and efficient, removing unjustified exemptions, broadening the tax base, shifting taxes away from labour, improving the efficiency of tax collection and tackling tax evasion.

Following this welcome endorsement, the Member States were invited to reflect those priorities in their national reform programmes. These programmes are currently being analysed by the Commission. The end result of the European Semester process will lead to country specific recommendations for each Member State, in various fields of economic and social policy. This includes taxation.

Tax coordination

While growth-friendly tax reforms are important, it is equally important that national tax measures are effective. They should not be undermined by a lack of policy coordination. To tackle these issues properly, we have to work towards better tax coordination and tax administration in the European Union.

Why do we need better coordination? First, because tackling cross-border tax issues in isolation can pose serious obstacles to the proper functioning of the Single Market. By working together for better tax coordination, we can bring more certainty and less red tape – a better environment in which businesses can grow. In this context, I am very encouraged that Member States are committed to carrying forward the work on the Commission's proposals for Energy Taxation, the Common Consolidated Corporate Tax Base, the Financial Transaction Tax and Savings Taxation. I am also delighted by the very broad support of the European Parliament towards our initiatives. This reflects the high expectations of citizens and businesses for fair, simple and sustainable tax rules in the EU.

Second, the Single Market, combined with a currency union, has increased the mobility of production factors and goods, but also of profits and savings. We thus have to factor the element of increased tax competition into our analysis of possible solutions.

Third, working together as a Union gives us strength in numbers in fighting tax evasion and tax fraud. Successfully countering tax evasion and fraud is a key factor in securing tax revenues and ensuring prosperity. In these difficult times we must ensure that taxes are efficiently and fairly collected when they are due. There have been important international developments over the last three years in this field. They have given a real impetus to ensuring transparency and cooperation against tax fraud. At EU level, the adoption last year of a new Directive on tax administrative cooperation ensured that the EU continues to lead the way, particularly as regards automatic exchange of information.

The promotion of good governance in global fora such as the G20, OECD and UN is also on our political agenda. We aim at using our trade and partnership cooperation agreements with third countries to promote our policy. And specific attention is devoted to improving developing countries' tax systems in the EU's development cooperation policy.

In this context I am particularly pleased that the European Council has called for concrete ways to be developed so that we can fight more effectively against tax fraud and evasion. We are now preparing elements of a strategy that will be presented to EU heads of state and government in June. I do hope that this political endorsement by EU leaders will help to accelerate the adoption of the pending legislative proposals that impact on the fight against tax fraud and evasion, in particular the urgent upgrade of the Savings Directive.

The crisis has changed attitudes to how we approach taxation within the EU. Gone are the days when Member States can "go it alone", implementing tax policies in isolation without a thought to what their neighbours are doing. Heads of State and Government have called for stronger coordination through enhanced dialogue on taxation at EU level, putting special emphasis on improving the efficiency of tax collection and tackling tax evasion. Taxation is now repeatedly highlighted as a fundamental component in our recovery efforts. Most Member States are committed to progressing and to using all the tools available to deliver – and rightly so. They can count on the active support and involvement of the Commission in this endeavour.

Full speech

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