What are the real targets of EU’s efforts to fight tax evasion?

Statement by Algirdas Šemeta, Member of the EC in charge of Taxation, Customs, Statistics, Audit and Anti-Fraud on the setting up by the EC of a platform for tax good governance, (EC Audiovisual Services, 23/04/2013).

Statement by Algirdas Šemeta, Member of the EC in charge of Taxation, Customs, Statistics, Audit and Anti-Fraud on the setting up by the EC of a platform for tax good governance, (EC Audiovisual Services, 23/04/2013).

Algirdas Šemeta, the European Commissioner responsible for Taxation Audit and Anti-fraud announced yesterday in very low tones the creation of a new consultative committee in Brussels, under the name of “tax good governance platform”. This was a very disproportionate outcome, after the widely advertised Commission’s initiative to crack down on tax evasion in the European Union, estimated roughly at €1 trillion yearly. Incidentally some ten days ago the issue had been exposed as a cover up operation for other unspoken plans, drafted by the EU’s big shots. But let’s start the story from the beginning.

Many people in Brussels still have the shivers remembering the aggressive comments by the Austrian minister of Finance, Maria Fekter, who said very loudly that the British economy is a very large money laundering machine. In this way she set on fire the informal but very important meetings of the Ecofin and the Eurogroup councils, organised in the Dublin Castle the weekend before last. On the agenda of both bodies was written that the EU should start a crusade against tax evasion, and the whole affair had to start from the dismantling of national legislation protecting banking secrecy in certain EU countries.

Focus on Austria

In this field Austria is supposed to be a champion, having very strict such laws. As if everybody belonged to the same secret collusion many important EU ministers of Finance, like the French Pierre Moscovici, kept pointed a finger to Vienna demanding a generous relaxation of the country’s bank secrecy laws. And this, despite the fact that Austria doesn’t have a reputation of being a tax haven or offering money laundering in its banking sector.

This enraged Fekter and being herself an outspoken person she did what she did. In reality she exposed the Commission’s widely advertised anti tax evasion initiative, as being an undercover operation organised by the three big European powers Germany, France and Britain. Their target ostensibly being to close down the peripheral tax havens and money laundering centres operating within the EU, like Cyprus, Luxemburg and Vienna in order to attract the “business” to London, Paris and Frankfurt. Pressures from the US and the EU have already thought Switzerland that the easy money its bankers were making belongs to the past. Today this country cooperates closely with the American judicial and the tax authorities. Soon it will be Berlin and Paris to ask the same treatment from the Swiss bankers and they will get it.

The instrument

In any case the EU Commission continues to promote its plan to curb tax evasion in the EU with or without hidden targets. To this effect Šemeta issued yesterday an announcement describing the duties and the mandate of this tax governance platform. According to the relevant press release: “The Platform for Tax Good Governance … will be made up of around 45 members: a high level delegate from each Member State’s tax authority and up to 15 non-governmental representatives. The latter will be appointed by the Commission… The Platform will follow in particular the progress being made on two Recommendations linked to this Action Plan.
*The first Recommendation foresees a strong EU stance against tax havens, going beyond the current international measures. Using common criteria, Member States are encouraged to identify tax havens and place them on national blacklists.
*The second Recommendation is on Aggressive Tax Planning. It sets out ways to block off opportunities exploited by companies to avoid paying their fair share of tax. These include reinforcing the anti-abuse provisions in bilateral tax treaties, national legislation and EU corporate legislation. Any artificial arrangement carried out for tax avoidance purposes would be ignored and companies would be taxed instead on the basis of actual economic substance”.

False international aspirations

The Commission also notes that the “Platform” will seek cooperation with the EU’s international partners in the G8, G20 and the OECD countries. The problem is however that in those organisations the US and Britain are very powerful and can veto whatever the EU recommends if they don’t like it. In reality the US and Britain would never agree to truly binding procedures to curb tax evasion. For one thing London’s and the New York’s financial centres traditionally attract black money from all over the world. It’s the blood in their veins.

On top of that both countries have created tax havens within their territories, like the British Channel Islands and the State of Delaware in the US. In no way the US and the U.K. would ever take seriously what Brussels have to say about tax evasion and money laundering. Their only worry is to block the money related to whoever is  their enemy at the time like Iran, Al Quaida and the government of Syria presently and God knows who tomorrow. Let alone other countries and territories like Hong Kong under Chinese jurisdiction, the British Virgin Islands, Bermuda, Liechtenstein, Bahamas, Cayman Islands, Netherlands Antilles, Panama and elsewhere in the globe.

In short it’s more than certain that the EU Commission would have never seriously expected effective cooperation to fight tax evasion and money laundering in the context of the G8, G20 and the OECD. Words yes concrete acts never. Then why the Commission insists in this direction? The answer lies in the quote from the above announcement where it is clearly stated that, “The first Recommendation (to this committee) foresees a strong EU stance against tax havens”. Understandably the internal EU tax havens and money laundering holes will be the first and only target of all those Commission efforts. But can Britain or any other from the big EU fish be the target? Obviously no.

Control or destroy the small

In view of that there is no doubt that what Fekter denounced has not being taken back but it progresses taciturnly in ways the Commission knows very well. After Cyprus it will be Luxembourg, then Austria and Slovenia and so on. Yes at the end there will remain only London, Paris and Frankfurt to do the dirty job but not with peanuts and under political and otherwise control. As for the rest of the world, Brussels could never touch the tax haven and money laundering centres around the globe. Nor is this its real target.

All in all the political clout that Germany, France and Britain have on the EU will be soon translated into direct financial control. Vienna and Luxembourg may escape destruction only if they cooperate and become simple agents working for the big ones. The European banking union and the consolidated supervision by the ECB will make sure that only the big fish will be able to have it their own way.

 

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