EU calls for greater ambition in struggle against harmful tax competition

EU Commissioner for Taxation Algirdas Šemeta (who we have praised before, here and here) has called on member states to be more ambitious in their fight against harmful tax competition. Speaking at a workshop on the outlook for financial market governance he said that the Code of Conduct on Business Taxation, which is the principle tool for tackling the beggar-my-neighbour practices of tax havens, "has proved useful in the past (but) is not ambitious enough anymore." He added, "there is a need to find renewed support on the principles at political level and to sharpen our instruments. In this period of intense consolidation efforts, no margin of manoeuvre exists: transparency and trust is the standard and no one can steal a tax base or tax revenue from their neighbours."

Good stuff, and we hope to see progress this year towards the creation of a common basis for taxing multinational corporations in Europe (the clumsily named Common Consolidated Corporate Tax Base), which would eliminate the wild different tax bases across the 27 member states. Not surprisingly, this step finds favour within the corporate community and progressives also see this as a step towards reducing harmful tax expenditures by EU countries competing for investment by offering fiscal subsidies.

In the context of the sustained fiscal crisis affecting Greece, Ireland, Italy and Portugal (all victims of endemic tax cheating), Šemeta also spoke about the need to strengthen the fight against fraud and evasion: "The EU agreed last year that bank secrecy will no longer be a reason to refuse cross-border cooperation. A dynamic approach on multilateral automatic exchange of information has now been launched." That's more like it. The OECD's feeble 'on request' model must be set aside, and automatic information exchange accepted as the effective global standard, not just for EU member states, but for countries across the world.

You can read more of Šemeta's statement here.