MEPs urge EU to tackle tax havens and avoidance

EU loses €1 trillion in tax revenue a year

The European parliament has urged EU member states to halve the €1 trillion taxation gap within the next eight years by tackling tax havens and improving tax collection.

MEPs this afternoon voted for a draft resolution, ahead of tomorrow’s EU summit in Brussels, calling on member states to allocate resources to prosecute tax evaders and recover lost assets.

The resolution also calls on members to suspend or revoke the banking licences of institutions and advisors who assist their customers in tax fraud.

European Commission president Jose Manuel Barroso said the EU has built up a "toolbox" for tackling tax avoidance and fraud and "now we have to use it."

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Addressing the parliament in Strasbourg, he said he would urge tomorrow’s summit of EU leaders to support automatic exchange of banking information between tax authorities, adding that he would like to see this become the international standard.

Mr Barroso said the EU had been making proposals to target tax avoidance “for several years” and now “we see a growing interest in tax issues among member states which, frankly, was not there before.”

The loss of tax revenue across the EU, at €1 trillion a year, is nearly double the 2012 combined annual budget deficit of all member states. “This is a huge amount of money to simply let through the net,” he said.

Rapporteur Mojca Kleva Kukus said the scope of tax avoidance and evasion was “scandalous”. She said the European Commission must co-ordinate tax agreement between member states.

Her report calls for an end to bank secrecy as well as obligatory reporting for all multinationals. Tax loopholes used by large companies to legally avoid tax have to be closed, she said.

She added that tax havens are a “major problem”. There is a need to clearly define what constitutes a tax haven, she said, and the report goes on to urge the Commission to “compile and create a European blacklist of tax havens” by the end of next year.

A second resolution on “how to free the EU potential for economic growth”was also passed by MEPs. Rapporteur Ildikó Gall-Pelcz said the economic crisis required “relevant stimuli” to be put in place. “We need a tax system that is going to foster economic growth,” she said.

“We don’t need more new types of taxes, we need more people and businesses paying tax... we need to plug the loopholes that are out there.”

The calls come amid Government denials that the Irish tax regime has allowed Apple to avoid paying billions of dollars in tax.

A US Senate investigations subcommittee found Apple has used a complex web of offshore entities, including two Irish subsidiaries which it claims are not tax-resident anywhere, to avoid paying billions of dollars in income taxes.

In Brussels this morning Tanaiste Eamon Gilmore said Ireland had a "very transparent tax regime", and that the issued raised by the Senate report "are not issues that arise from the Irish taxation system".

Dan Griffin

Dan Griffin

Dan Griffin is an Irish Times journalist