Tax evasion and fraud threaten the European project

European Parliament Special committee on organised crime, corruption and money laundering with commissioner Algirdas Šemeta in charge of Taxation and Customs Union, Audit and Anti-fraud in the forefront, (European Parliament Audiovisual Services, 7/5/2013).

European Parliament Special committee on organised crime, corruption and money laundering with commissioner Algirdas Šemeta in charge of Taxation and Customs Union, Audit and Anti-fraud in the forefront, (European Parliament Audiovisual Services, 7/5/2013).

Tax evasion and avoidance has been a perennial issue from the moment taxation was invented. Presently the European Commission estimates that in the EU of 27 member states, tax avoidance and fraud runs up to €1 trillion yearly, more than enough to foot the bill of government deficits that plague the EU economy and have led to the present crisis of sovereign over indebtedness.

The government account consolidation effort undertaken in Greece, Spain, Portugal, Ireland, Italy and elsewhere in Eurozone, enforced through the application of draconian austerity programmes, threatens even to undermine the very concept of the European project alienating all those citizens who duly pay their taxes from the European ideal.

On this issue, Algirdas Šemeta, EU Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud, speaking to the European Parliament Committee Economic Committee on Taxation/ Brussels said, that “Member States’ consolidation efforts, which need to be sustained, can only be accepted by our businesses and citizens if they are seen to be fair and equally shared. For that reason, it was essential to put more emphasis on tapping into the huge pot of uncollected taxes which escape the public purse through fraud or evasion”.

Tax evaders push for Grexit

Greece is the most striking example of that. All reports about the country’s economic woos have repeatedly stated the problem of the one-sided distribution of the huge load to straighten up the government’s balance sheet. For three years now the Greek austerity programmes are financed with severely increased taxation on those who traditionally duly pay their taxes, that is wage earners and pensioners. On top of that the same part of the population has endured large reductions of wages and pensions. So unfair has become the distribution of the cost to bring down the Greek fiscal deficits, that it has distorted the sociopolitical map of the country.

Greece is the only country with three or even four newly appearing or greatly strengthened extremist parties in the Parliament, practically favouring the exit of the country from the European Union. The Greek political spectrum was completely different some years ago with a regular Parliamentary representation of left and right inclined parties. The present picture contains an extreme right-wing almost fascist party and a left utterly populist political formation being represented in force in the legislative. This last one left formation has even gained second place in the popular vote, playing now the role of major opposition in the Parliament. All this distortion of the sociopolitical climate in the country is the direct outcome of three years of unfair distribution of the cost to cut down government deficits, through unfair tax burden distribution.

All the Greek governments over the last thirty crisis years and even during the last crisis period didn’t touch the almost totally escaping from taxation market services sector, the professional and the small businesses. In reality Greece came close to a complete economic and political collapse without having yet avoided it altogether, exactly because of this complete distortion of the tax burden. In the core of this deplorable situation there is a lack of political will to reverse this catastrophic prospect.

All over the EU

According to Algirdas Šemeta this Greek distortion is present in varying degrees all over Europe. Speaking yesterday to the European Parliamentary Committee on Economics he said, “Up to now, I’m afraid that the appetite for full and unreserved coordination (to effectively counter tax evasion and fraud) has been lacking amongst the Member States. And as a result, fraudsters and evaders have been able to use our Single Market as a playground for their activities”.

Still the European Commission tries to reverse this. Towards this end Algirdas Šemeta also stressed “It is the reason for the EU Action Plan against tax fraud and evasion, which I brought forward last December. If fully implemented, this Action Plan can dramatically improve our chance of eliminating these pervasive problems, and return hundreds of billions of euro back to the public purse”.

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