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Tax dodgers under fire

Posted by Nick Prag at 17 November 2017, 00:15 CET |
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Luxleaks, the Panama Papers, and now the Paradise Papers. Enough tax dodging to build quite a few hospitals, schools and other infrastructure. Yet the speed and enthusiasm with which EU governments have rushed to tackle tax evasion and avoidance underwhelmed MEPs this week.

The Paradise papers is the latest leak of documents that show how millionaires and international corporations hide their wealth and try to avoid paying their taxes.

Before that, in April 2016, leaked documents from Panama law firm Mossack Fonseca provided an insight into how politicians, businessmen, criminals and public figures use offshore schemes to hide their assets from public scrutiny.

Two years earlier, the LuxLeaks scandal showed how Luxembourg offered large corporations preferential tax treatment.

These scandals prompted this week's urgent debate in the European Parliament on sharp practices in the field of tax.

There was no shortage of opprobrium for the sharp practices used by the super-rich and multinationals to hide their wealth.

EU states were heavily criticised by MEPs for "not stepping up to the mark". They said the Council should not hide behind unanimity rules in the battle against tax avoidance. Currently, tax decisions taken at EU level must be agreed by all member states.

Moves are under way. The Commission says it is close to finalising a list of "non-cooperative tax jurisdictions", or tax havens. This blacklist should be available after the 5 December Ecofin Council. 

But it is the Member States that came in for the most stick for not taking more urgent steps to clamp down on tax avoidance schemes.

A telling question from German ECR member Bernd Lucke:  "How come we need investigative journalists to reveal all this? What are national tax authorities up to?"

And Czech EPP member Ludek Niedermayer said: "The extensive use of loopholes in tax systems and the intentional or unintentional creation of special tax regimes are harming our economy, harming competition, increasing inequality, and as result, people are losing trust."

The risk of this dragging of feet is clear: as Commissioner Pierre Moscovici put it, when it comes to the next European elections in 2019, "we will all lose and it will be the populists, and the cynics and allies of those tax avoiders and evaders who will be elected."

Resolution

Final report on the inquiry into money laundering, tax avoidance and tax evasion

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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of EUbusiness.com. Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.