EU finance ministers set their sights on tax dodgers

Business News

May 14, 2008, 9:19 GMT

Brussels - The European Union's finance ministers were Wednesday expected to focus on tax dodgers, a day after denouncing the 'scandalous' salaries and bonuses paid out to some top managers. At a meeting in Brussels, ministers were due to agree on a series of measures designed to fight VAT fraud, which they estimate costs the EU more than 100 billion euros (1.55 billion dollars) each year as businesses exploit loopholes in the single market. Ministers were also expected to have a look at a preliminary report by the European Commission on its Savings Directive, which since 2005 requires most member states to share tax information. Growing calls for a reform of the directive have emerged after a European-wide scandal involving scores of wealthy citizens who have created foundations to stash their savings in tax-havens such as Liechtenstein. 'Recent events have shown how easy it is to avoid taxes,' one commission official said this week. However, resistance to change from member states such as Austria, which jealously guards its banking secrecy rules, means a new Savings Directive is not likely any time soon. On Tuesday, finance ministers from the 15-member Eurogroup attacked top managers who receive unjustified corporate bonuses and golden handshakes at a time in which a growing number of ordinary citizens are struggling to make ends meet. Luxembourg Prime Minister Jean-Claude Juncker, who chairs the regular euro-area meetings, said ministers were considering changes to the tax system in order to limit what he called a 'social scourge.' Ministers also vowed to look at ways of fighting inflation, which hit 3.3 per cent in April on the back of rising food and oil prices and is acknowledged, along with slow growth, as the biggest threat to the economy.

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