Semeta urges EU tax reform

Europe must create a tax environment which allows businesses to expand and create jobs, the European Union's tax commissioner, Algiras Semeta, has told the Institute of International and European Affairs in Dublin.

Calling on member countries to cut compliance costs and red tape, so that businesses can invest in research, innovation and training, Mr Semeta said Europe must create a tax environment where it pays to work.

"Over the last few months, there has been a general trend observed in the member states towards fundamental tax reforms. However, there is still scope to shift the overall tax burden towards tax bases that are less detrimental to growth and job creation," he said.

Mr Semeta said Ireland was continuing to make good progress, having met all the quarterly fiscal targets under the economic convergence programme.

He noted that most of the tax related elements of the budget presented by the Irish Government last December were "in line with what the Commission recommends for quality tax reforms".

"But let me stress that, whether in Ireland or anywhere else in the EU, success relies on tax reforms which take into account two essential elements: competitiveness and fairness."

Addressing the Oireachtas Committee on Finance yesterday afternoon, Mr Semeta said that while member states retained their sovereignty on tax matters the issue of taxation could not be avoided in the debate about deepening European integration.

While the commissioner did not refer to corporation tax during his address he called on Ireland to help "push forward" the common consolidated corporate tax base (CCCTB) during its presidency.

"I would reiterate that the CCCTB has nothing to do with tax rates, and Ireland has nothing to fear in this regard. Member states must remain free to set rates and this flexibility allows a healthy degree of tax competition to be maintained."