07 April 2014

Šemeta: EU tax policy - achievements and way forward

Fair taxation

On the issue of fairness, the fight against tax evasion was central, as it concerns every citizen and business paying no more, and no less, than their fair share and about Member States playing fair amongst each other.  If we look back 5 years, this issue was barely on the political radar but citizens' demands for fair burden sharing, and Member States' needs in terms of revenues became too great for national authorities to ignore.

The inventory of new initiatives to fight against tax fraud and evasion is impressive: let's start with VAT. Our study last year on the VAT Gap gave us a concept of the scale of revenue shortfall in this area. And it is unacceptably high. To tackle this issue, we agreed on a quick reaction mechanism and measures to enable Member States to apply a reverse charge scheme – both of which should make a major difference in tackling large-scale fraud.  Eurofisc is also now well established, ensuring better cooperation between national VAT authorities.

Meanwhile, our 2012 Action Plan against tax evasion helped to focus and propel the political momentum in this area. After 6 long years of deadlock, we finally have agreement on the Savings Tax Directive. This was a strong signal that every single Member State is now committed to tax transparency, and that the EU will continue to lead by example when it comes to tax good governance.

I expect the Administrative Cooperation Directive – which I proposed last year – to be agreed before the end of the mandate. Together with the Savings Directive, this will cement the widest automatic exchange of information within the EU. Your recent work on the Parent Subsidiary Directive, as well as on Country-by-Country reporting, has supported and reinforced important Commission proposals to clamp down on corporate tax dodging.

The Commission will continue to use every tool at our disposal – whether state aid rules or the Code of Conduct on Business Taxation – to entice Member States to play fair and refrain from encouraging tax optimisation.

The Financial Transaction Tax (FTT) is remarkable for its huge popularity amongst citizens. And the FTT is remarkable for triggering – for the first time ever - enhanced cooperation in the field of taxation. Its fate now is in the hands of the 11 Member States signed up to it. I strongly hope that they deliver on their commitments and agree on the FTT as quickly as possible.

Growth and Competitiveness

Greater fairness in taxation was accented by the crisis, but so too was the need for tax policies and decisions that could support Europe's return to growth and competitiveness.

Through the European Semester, we have encouraged Member States to pay particular attention to designing growth-friendly tax policies. We recommended a tax shift away from labour towards taxes that are less detrimental to growth, such as those on consumption, environment and property. These recommendations are now being implemented by Member States, with special attention being paid to the most vulnerable citizens and businesses.

At European level, we have also sought to create a tax environment more conducive to growth and investment. For example, we know that the administration around VAT can pose major headaches to businesses. Our focus has been on cutting compliance costs, particularly for SMEs, and easing their expansion in the Single Market.  The proposal to review the Energy Tax Directive also very much reflects the growth-friendly taxation we should be implementing.

I believe that stronger links between the European parliament and national parliaments in taxation could deliver great progress. Whatever the future institutional evolution brings, the next Parliament will continue to have a crucial role in pushing tax issues forward.

Full speech

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