European Parliament’s new subcommittee sets sight on EU’s tax havens

Tax dodging costing EU Member States €1trillion a year in lost revenue, say MEPs.
Income tax

By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

02 Oct 2020

The European Parliament’s now has a “proper body to tackle Europe’s massive tax avoidance and evasion”.

That was the message from Greens/EFA group MEP Kira Marie Peter-Hansen, who also  told this site that “The creation of the new tax subcommittee is a long standing demand from the Greens/EFA group, and I would like to thank everyone who has pushed for it. I am both thrilled and honoured to be appointed as vice chair of the subcommittee."

She added that the subcommittee’s creation was “better late than never”, adding, “Parliament now has a proper body to tackle the massive tax avoidance and evasion that costs us billions of euros.

The new tax subcommittee will also help “shine a light on the shady practices of tax abuse", according to Portuguese Socialist member Pedro Marques, who also told the Parliament Magazine, “Our aim is to shine a light on the shady practices of tax abuse and design innovative solutions to deliver on tax justice.”

He pledged, “We will also make sure Europe’s tax system is ready for the future by exploring the move away from taxing labour and by fighting growing inequalities in income and wealth through progressive forms of taxation.”

Composed of 30 members, its mandate is to fight against tax fraud, tax evasion and tax avoidance.

“The creation of the new tax subcommittee is a long standing demand from the Greens/EFA group, and I would like to thank everyone who has pushed for it. I am both thrilled and honoured to be appointed as vice chair of the subcommittee" Kira Marie Peter-Hansen MEP

The subcommittee will, according to a parliament spokesman, delve into the various tax leaks and scandals of recent years.

Paul Tang, a Socialist MEP from the Netherlands, will chair the committee which also has four deputy chairmen: Markus Ferber (EPP, DE); Martin Hlavacek (Renew, CZ); Othmar Karas (EPP, AT) and Kira Marie Peter-Hansen (Greens, DK)

Tang campaigned for tax reforms as a member of the Dutch parliament starting in 2007 and throughout the financial crisis. He has been Parliament’s rapporteur on the Digital Services Tax and the Common Corporate Tax Base and a driving force behind parliament's designation of Cyprus, Ireland, Luxembourg, Malta and the Netherlands as corporate tax havens.

Tang told this site that Parliament’s efforts in fighting for tax justice have “reached the next level” with the launch of the subcommittee, adding that is “proud to have been elected its first chair and will do my utmost to put tax justice at the top of the agenda.”

He added, “Each year about €1trillion in tax revenue is lost to tax dodging. This incomprehensible sum of money is unjustly diverted away from essential investments in education, healthcare, critical infrastructure, law and order, and so many other areas crucial for a society to thrive.

“Our aim is to shine a light on the shady practices of tax abuse and design innovative solutions to deliver on tax justice” Pedro Marques MEP

"Especially in the context of the COVID-19 crisis, these foregone revenues are no longer acceptable. Moreover, tax competition and tax evasion have led to a growing gap between the world’s wealthiest and the rest of us. And history shows us that when inequalities spiral out of control, resentment and social instability follow.”

He stated, “We need to end current levels of tax dodging to shape society according to the wishes of our citizens and regain public trust in our democracies. That includes actively opposing tax havens within the EU.”

“We also need to make taxation a force for the transition towards a sustainable European economy. By making polluters pay for the damage they do to our society, we can pave the way for the European Green Deal to become a reality.”

The subcommittee will, he says, provide a permanent forum within which to address the “complex” topic of taxation. “We will shed light on the practices that cannot bear the light of day, put pressure on those not implementing agreed legislation and push for a fair and sustainable European tax system.”

“We can change the status quo. It will be a tough fight to ensure that huge corporations and high-fortune individuals contribute more fairly to the society and systems they themselves ultimately depend on. But it is a fight the subcommittee is ready to take on.’’

Further comment came from German Greens/EFA member Sven Giegold who said, “Tax evasion, tax avoidance and money laundering are a thorn in the flesh of our society and promote inequality and social division. This is why we Greens in the new tax committee want to promote European tax justice. There have been a number of successes here in recent years.”

“Each year about €1trillion in tax revenue is lost to tax dodging. This incomprehensible sum of money is unjustly diverted away from essential investments in education, healthcare, critical infrastructure, law and order, and so many other areas crucial for a society to thrive" Paul Tang MEP

“The European Commission has transformed itself from a driver of tax competition in Europe to an ally. The new permanent subcommittee is the beginning of a new stage in the fight for tax justice in the EU. After years of ad hoc committees, parliament can finally tackle tax evasion and tax avoidance on an ongoing basis.”

He said the new committee, “comes at just the right moment,” adding that “the Coronavirus crisis is leaving massive holes in the public coffers of European states. However, the economic recovery and green transformation won’t work with austerity programmes but require courageous investments for the future.”

“This will bring the fight against tax evasion, tax avoidance and financial crime back on the political agenda in the coming months and years.”

The new committee, he says, must put pressure on EU national governments in the council to “finally” adopt blocked tax initiatives such as public country-by-country reporting, the digital tax, the financial transaction tax, the VAT reform and the Common Consolidated Corporate Tax Base (CCCTB).

Giegold has proposed to the committee that a hearing be held with Member States on each of the blocked initiatives.

“This series of hearings must create a constructive embarrassment for the Member States. The ball is now in the German Presidency's court to lift the blockades in council. There has never been a better time to finally end European tax dumping and to fight for European tax justice".

The European Parliament has also set up special committees on cancer, Artificial Intelligence and the protection of animals during transport.

Read the most recent articles written by Martin Banks - EU moves to end Cypriot and Maltese Golden Passport schemes

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