Brussels - European Union finance ministers failed Wednesday
to make much headway in their fight against tax dodgers, rejecting a
pilot project to combat Value-Added Tax (VAT) fraud and deferring
plans to crack down on fiscal havens.
VAT fraud is estimated to cost EU governments more than 100
billion euros (1.55 billion dollars) in lost revenues as businesses
exploit loopholes in the bloc's single market.
However, a proposal by Austria for a pilot project which would see
the tax being paid by the recipient of a good or service, rather than
by its foreign supplier - the so-called reverse charge mechanism -
failed to gather enough support within the council of ministers.
While ministers also failed to reach an agreement on another
radical proposal, Laslo Kovacs, the European Commissioner in charge
of the tax portfolio, said he would be presenting 10 conventional
measures with a similar aim in mind during the last three months of
the year.
Ministers also had a quick look at a preliminary report by the
European Commission on its Savings Directive, which since 2005
requires most member states to share tax information.
A growing number of countries want to extend the scope of the
directive in the aftermath of a European-wide scandal involving
scores of wealthy citizens setting up foundations to stash their
savings in tax havens such as Liechtenstein.
But progress on this front was stalled by Luxembourg and Austria,
which jealously guards its banking secrecy rules.
In the end, ministers gave the EU executive until September 30th
to present a final report on the directive, but did not impose a
strict deadline for it to come up with new proposals.
'You have to bear in mind that on taxation, the unanimity rule
applies. That is why these discussions seem so long. It is very
difficult to reach unanimity in such complex areas as taxation,' said
Andrej Bajuk, the Slovenian finance minister whose country holds the
rotating presidency of the EU.
Ministers attending the EU's so-called Ecofin Council also vowed
to keep their budget deficits in check in spite of the economic
slowdown and to fight inflation, which at well over 3 per cent has
emerged as one of their chief concerns.
On Tuesday, a meeting restricted to officials from the 15 members
of the eurozone turned against what they called the 'scandalous'
salaries and unjustified corporate bonuses and golden handshakes that
are paid out to some of the continent's top managers.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the
regular euro area meetings, said ministers were asked to consider
changes to their tax systems in order to limit what he called a
'social scourge'. One solution being voiced was to stop making such
handsome payouts tax deductible.
'We are aware of the huge gap between our continued appeal for
wage restraint and the continued existence of these excesses,
particularly in respect to golden handshakes, and we are examining
fiscal instruments that may be brought into play to combat such
excesses,' Juncker said late Tuesday.
'It is no longer acceptable to have situations whereby certain top
managers have excessive salaries and also benefit from golden
parachutes, payments which have no relationship to their
performance,' he said.
The rest of the EU's finance ministers held an informal discussion
on the issue during lunch Wednesday.
Giulio Tremonti, who returned to Brussels as Italy's finance
minister after Silvio Berlusconi's election in the country's April
general election, noted that discussions of this kind on corporate
bonuses would have been 'unthinkable' four or five years ago.
'The world has radically changed,' he said.
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