income-taxG20 finance ministers and central bank chiefs will be meeting down under in Sydney, Australia, later this week. Trade and banking will be high on the agenda, but tax reform may also be discussed, especially as the G20 is working on implementing ambitious plans to improve the sharing of tax information between members as a way to help clamp down on global tax avoidance and evasion.

Unpaid taxes have been making the headlines in Europe recently, with French President François Hollande going after the internet giant Google and arguing that “tax optimisation” strategies will not be tolerated in France. Germany, meanwhile, has seen two recent high-profile cases of tax evasion, including the embarrassing resignation of a senior member of the German  Social Democrats.

Tax will also likely be an important issue in the European Parliament elections in May, with parties of the Left in particular arguing that public sector cuts wouldn’t need to be so biting if everybody in Europe just paid their taxes fairly (and, don’t forget, you can vote in our Debating Europe Vote 2014 for the party you support).

Last year, we looked in detail at the problem of tax evasion and avoidance in Europe (and we published an infographic on the topic). We had a comment sent in by David arguing that there should be EU-wide rules in place to fight against tax evasion:

citizen_icon_180x180The EU should implement laws that would allow tax evaders to have their funds repatriated by the nation state they refuse to pay taxes in, and serving the offenders a Europe-wide punishment in an easy, straightforward way

We took David’s comment to Theodoros Skylakakis, a Greek MEP who sits with the  Liberal Democrats in the European Parliament. He argued that the real problem was that taxes in Europe are too high, and that a “European IRS” to replace the tax authorities of 28 different countries could help solve the problem:

At least some of our readers would agree that many European taxes are too high! For example, we had a comment sent in by George, arguing that tax evasion takes place wherever taxes are raised disproportionately to the ability of the citizens to pay and the social and other services offered by the state. We took this comment to Wolf Klinz, a German MEP who also sits with the  Liberal Democrats in the European Parliament. Klintz believes the problem has little to do with high taxes, instead arguing that “some people just take pride in not paying taxes”:

Next, we had a comment sent in by Vincente, arguing that it would be “very easy” to stop tax evasion in Europe: simply stop the free movement of capital and let central banks control capital exports and charge tax on any money being sent out of the country. We asked Wolf Klintz to respond:


Ok, that’s what the  Liberal Democrats think. But what about the Eurosceptics? We also spoke to Morten Messerschmidt, an MEP with the anti-immigration Danish People’s Party (which sits with the Eurosceptics in the European Parliament):

Morten MesserschmidtWell, I don’t think we should limit or ban the free movement of capital. I think the free movement of capital is one of the major factors in a modern economy that actually creates the wealth and benefits we all like. So, I wouldn’t go in that direction. I think rather we should engage with the countries or territories that are the problem – such as the Cayman Islands or whatever it might be – and sanction them in ways that would influence those countries that have power over these territories. It’s something we do in many ways when we want to achieve something outside of European jurisdiction. The Cayman island, for example, is part of the British Overseas Territories, so if we want to limit tax evasion, tax speculation and so on in the Cayman islands, we must find a way to sanction Great Britain for not doing anything about it. And that could be done within the EU, speaking of agricultural subsidies or other benefits the UK might have. I think that’s the way of doing it, instead of speaking of banning the free movmeent of capital.

Are taxes in Europe too high? Does the EU need a united “European IRS” rather than the tax authorities of 28 different countries? Or is the problem caused by EU rules on the free movement of capital, and would letting central banks control capital exports again do the trick? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.

Vote 2014

Voting is closed in our Debating Europe Vote 2014! The results are now in, so come and see what our readers thought!

IMAGE CREDITS: CC / Flickr – Images Money



53 comments Post a commentcomment

What do YOU think?

    • avatar
      Limbidis Arian

      E intrebare capcana desteptule.
      Taxele vor fi mai mici pt cei cu bani, nu pt ‘catei’ ca tine si mine.
      “normal ca da” – gandeste inainte de a posta.

  1. avatar
    Olivier Laurent

    Taxes are too high, indeed. Reducing the fiscal competition between members states won’t solve this problem, it wil increase it.

    • avatar
      Samuel Tandorf

      I agree. The EU needs a “European IRS” rather than 28 different tax authorities. A federal EU tax and a state tax is the only answer.

    • avatar
      Marcel

      No we don’t. The Eurosoviet must never gain taxation powers.

  2. avatar
    Don Chattari

    Taxes way too high and not equaly distributed in the EU. Some states paying lots for Europe, some little, it’s discrimation, why should one states pay more than the other, we supposed to be alll Europeans?

  3. avatar
    Danijel Knezevic

    Lower taxes on small and middle business, and that will lower tax evasion, and increase economic activity.
    Cut some social benifits, and state spending, rationalize where ever is possible, and financial gap from lower taxes will tighten.

  4. avatar
    George Danieldsg

    No taxes for lower incomes and proportionary taxes for the wealthy.Sound economics.The rest are efforts to justify the protection of weathy tax evaders.In Greece there is not any effort to collect 63 billion euros taxes from prominet weathy ,or depositors at SWISS, or Lagards list ,or real estate offshor companies and nobody cares.

  5. avatar
    Frankie Babyee

    Ha! You guys are f*cking incredible! Do you guys ever take a vacation from trying to slowly drain dry every last person on earth through taxation?United European authority sounds like another shadowy bankers club for the new world order, so no thanks. You took enough of our money. Leave us alone!

  6. avatar
    Phạm Lê Quốc Việt

    No to tax cartel, we dont need any directive from european tax autority. Lets national govevernments make efforts to reduce tax burden, so there is a certain fiscal competition between them. Governments do better will get more tax revenue. The bad government will be punished by tax payers. european citizens can also “vote with their feet” to escape from their government where the tax is higher

  7. avatar
    Christos Mouzeviris

    Yes but only after full political and economic integration. Or you will create another fine mess with the rich countries becoming even richer by smothering any competitiveness of smaller nations!!

  8. avatar
    Borislav Sotirov

    Low taxes means high poverty and social stress. EU of noborders and separate social systems increases iterstate explotation. United Europe needs to unite it’s sociall and tax system.

    • avatar
      catherine benning

      How can reducing taxes make less tax avoidance? Companies, their accountants and their legal protectors entire job is the reduce taxation to little or nothing at all for those who have the most. Which they are able to do very well because politicians give them the loopholes to exploit the system to the detriment of all citizens, including themselves, if they only realised it. Greed is not good, as Wall Street suggests. That is the thinking of the small minded.

      What you are really asking in this thread is, should the obscenely wealthy or exploitative corporations pay no tax. Why not instead suggest none of us pay any tax? That may go down well.

      You won’t do that because you will have no way of earning a living if you do as nothing will be in the pot. And whilst we are at it, all those who work for Brussels in whatever capacity should pay their rightful and full taxes. You are not Tzars and tzarinas or monarchs of any kind who can just decide you owe nothing to the public purse. That is a ridiculous concept and does you no good either. Responsibility is the mainstay of us all. Collective effort is the only way forward for a just society. And no its not impossible.

      The reverse is the truth. Taxation, especially on the very wealthy and the corporations must be raised to a realistic level, and all the loopholes removed so that profits cannot be moved off shore to avoid responsibility toward the society that makes them rich. The workers are their funders not the other way around.

      If you look back to UK history, 1950’s/1960’s, when the reality was, wealth redistribution by high taxation encouraged infrastructure, health services and full employment was nicely in place.The rich, regardless of how they bleated, did not suffer. We were on a more equal footing moving together with a focus on making life better for all. We had a seriously comfortable middle class. Now, it is as bad as Russia under the rule of the Tzar.

      Borislave Sotirov above is, in the main, correct. No borders, or, separate social systems and a fully united tax system that is to the benefit of all people and the European union as a whole is the answer. One continent, one nation for the benefit of all its citizens. Not just a handful.

      And by equality for all, I don’t mean some are more equal than others. as in special groups or so called ‘positive discrimination. Discrimination can never ever be positive that is an oxymoron.

  9. avatar
    Laszlo Nagy

    Since the free movement of capital is one of the 4 primary freedoms of the European cooperation, it can not be restricted. The taxes are unfairly high for many citizens, but upholding the social services costs a lot.
    There is already an Europol, is that not dealing with these subjects, if they are unawful?
    What should be done, is increasing the general morale of the citizens, by providing a generally positive economic atmosphere (also more jobs), so that they do not panic and try to hold all the cents they can whatever way they can.

  10. avatar
    Paul X

    “a “European IRS” to replace the tax authorities of 28 different countries could help solve the problem”

    You have to love these people who think that centralising things is the answer to everything?
    He doesn’t go on to give any explanation of just how a European Revenue system will be any better than the National systems?… and that is because from past experience nothing managed at European level gets done done any better than nationally, the only “value” the EU adds to anything is an additional level of bureacracy, waste and corruption

    So who is going to do the enforcing for the EUIRS? will that be done at National level in which case there is no change, or will there be “EU Tax Enforcers” marching into countries to arrest tax dodgers?…a very worrying thought

    People have a right to know where their tax goes, currently the EU cant even account for its budget so I think we are a long way off trusting them with our tax

  11. avatar
    Richard Osborne

    No, lowering taxes would not help. The people who avoid tax are not the middle class, they’re the ones at either end of the social spectrum

    • avatar
      Limbidis Arian

      Actually they are not “at either end of the spectrum” they are just at ONE END..the top.

  12. avatar
    Karen Fabbri

    Yes. They are too high in Belgium. Start fixing the potholes instead of funding multiples layers of gvt in such a small country.

  13. avatar
    Eli Dirkx

    Fuck you, Europe. I want a refund.
    Otherwise, lower taxes for everyone might be slightly less…”taxing” for the people at hand.

  14. avatar
    Caban-benavides

    Another admin to finance from tax payers money

  15. avatar
    Arjan Tupan

    I rather think that unifying tax codes would be a good first step. Now, member states are using their tax codes to lure companies, in the hope that having a company’s HQ will bring economic benefit to a country. I think the problem is not so much with the companies being great at playing by the rules, but the rule makers trying to abuse the rules to get imaginary profits.
    As long as member states can fiddle with their tax codes, there will always be one to offer the lowest taxes, offering companies the opportunities to find the place where they legally pay the least. I really think it’s not fair to blame the companies, and call them tax evaders, if we have made rules that allow them to look for ‘tax optimisation’.

    • avatar
      Marcel

      My country would lose business and companies if we had a unified tax code.

      So our answer is: NO + veto any attempt to try and get a unifying tax code.

  16. avatar
    Limbidis Arian

    Utter nonsense the taxes are “too high” now because the POOR and the middle-class PAYS the lion’s share.
    The RICH send their money to tax havens ( hello Cyprus ) and avoid taxes OR use their massive wealth to buy off the tax laws.

    What we need is a SINGLE federal tax rate ( in percentage ) EU wide AND a progressive income tax.
    The federal tax would allow Brussels to function AND allocate resources to states more in need – and will be paid by countries more developed according to capacity.
    And the income tax should be progressive. Stock and bonds, shares and derivatives should be taxed more because THESE are the big things the rich hide their money in.

    Finally, an EU wide “import tax” should be raised high enough that any country not :
    – paying their workers on par with the EU
    – not respecting environmental laws
    – not allowing their workers to unionize
    will go bankrupt or stop getting any benefits from trading with us.
    China thrives through slave labor and destruction of this planet.
    So does the US although their ‘slave labor” part is just begining.
    We must take a stand against this practice or all our social progress will be for naught.

    • avatar
      Marcel

      In other words, you propose to steal money from my country and transfer it to yours. Because that is what a ‘federal’ system comes down to. Please explain how we can cut 25% off our national budget to enable your ‘fiscal transfers’?

      And how do you plan to get anyone here to vote for it? Oh wait, I just discovered the flaw in my thinking, people like you don’t plan to have people vote for this.

  17. avatar
    Marcel

    Tax avoidance is not illegal by any means. In fact, it is quite legal.

    Tax evasion is a different story.

    I’d like to see a rule enforced that you pay tax where you earned the money. So if you made 25% of your money in Germany, you pay tax over that 25% in Germany with a German rate, REGARDLESS of where you are incorporated.

    Same with intellectual property and all that, you may claim all you want that it is located in the Cayman Islands, but you should get charged proportionally as to where you gain the benefits. If 25% of the benefits/revenue of your IP came from doing business in France, you pay tax over 25% of your business in France, with a French rate.

    Place of incorporation (such as Cayman Islands, Bahamas or wherever) should be irrelevant.

  18. avatar
    Rui Manuel Simões Oliveira

    We should have careful when we talk about this kind of specific subject, because it`s no so simple but in a first phase, i think that this measure could contribute to better fiscal regulation in the european union tax system. The tax evasion is one of the biggest issues that European Union has to deal with, and rules in this case should be more tight. If lower taxes, can increase the investments, there is no guarantee that the tax evasion would suffer a decrease. But analysing the problem in the atual situation, in my opinion i think this could be a positive start point in order to re – arranje the bank system in European Union.

  19. avatar
    Jaume Roqueta

    no… lower taxes will help to privatize social sectors… Put yourself in the head of a psicopat and you will be right in predicting how politicians and bussines man will act!

  20. avatar
    Christos Mouzeviris

    Well done Luxembourg and Austria.. You did the right thing.. Yes hopefully Banking secrecy will die off eventually…

  21. avatar
    Borislav Valkov

    Bulgaria is an example that if someone wants to evade tax, then their weight will not be considered. I personally think that if tax evasion is punished with jail then it will be: Don’t do the crime if you cann’t do the time.

  22. avatar
    Andrea Tuswald

    Christos Mouzeviris you wouldnt congratulate if you knew the deeper sense of this measure. what media says is to convince naive people it must be good ;)

  23. avatar
    Gerard Francois

    Pure demagoguery draped in morality. A measure designed to trick the voters instead of taking the hard measures such as balancing the budget. The so called rich will always find a way to shelter their assets.

  24. avatar
    Yolanda Loureiro

    unfortunately we are discovering step by step that europe directions despite all advertising of etic procedures, the real policies are opposed to that. only a severe change in politicians and parties will change this

  25. avatar
    Rudi Spoljarec

    Yes. Who is not paying, is not paying anyway, but who pays, will pay more, because will earn more. That’s it

  26. avatar
    eusebio manuel vestias pecurto

    A UE precisa de uma autoridade fiscal unida e só assim se pode travar a fuga dos impostos nos estados membros

  27. avatar
    Светослав Павлов

    ???? ? ???? ??????? ?? ???????????????? ????, ??????? ? ??????????-???????? ???????? ! ??????? ?? ??????? ? ????? ??????????? ?? ?? ???? ??????? – ????????, ?.?. ????? ?? ??????. ????? ????? ?? ?????????? ????????? ? ???????????? ? ???????? ??????????????? ????? ???? ??? ???? ?? ????? ?? ????? ?? ?? ????? ?? ??????? ?? ????? ????. Please HELP ! This Post will stay on as much places as I find ! My protest is against the Four Political Parties( GERB, BSP, DPS, Ataka ); against ALL the COPS; Against the MAFIA and against MEDIA !!! DO SOMETHING BULGARIA WILL FALL…
    http://youtu.be/LA8lyQoxGgw

  28. avatar
    Yannis Perrotis

    During an acute economic contraction in Greece the state decided to increase taxes, in effect applying anti-Keynsian economics. This has been done under the auspices of the Troika and the results have been disastrous. GDP has shrunk by more than 1/3 in 4 years, structural change has been limited to reduction of private wages and increase of unemployment to around 30%, debt now stands at a higher % of GDP at approximately 170% many people suffer enormous hardship and have lost or are losing all their property and European leadership is celebrating Greece’s “success” in tackling the problem. The power of the even stronger public sector vs the destroyed private sector expressed in numerous ways has increased and in the middle of this taxes have increased by a lot. tax evasion or non payment due to inability is one of the few tools of survival for many. The state taxes unfairly, mistakenly and inefficiently and destroys those unable to pay these taxes. This is taxation and justice in Greece in 2014! Europe is a Union of 1 principle – misperceived and misexecuted fiscal balance; a principle that will certainly lead to Europe’s demise! High taxes lead to tax evasion – high taxes lead to the death of Europe!

  29. avatar
    E Pluribus Unum

    One simple example to you all who defend higher taxes. Compare America and Europe when it comes to automobiles, registration taxes, fuel taxes, insurance etc. America has no vehicle tax, most European countries tax the hell out of your car if the engine gets a little too big or emits some CO2. Fuel also costs 2 to 3 times more in Europe than America due to taxes.

    The reasoning behind European taxes is the social-welfare government idea. The idea that government policies of increasing taxes will inevitably place an economic burden on people and force them to change their habits; i.e. stop using their car, using public transport or buying more fuel efficient vehicles/hybrids/electrics.

    However, what most tax defending Europeans don’t realise is that the country that has low taxes, cheap gas and big cars with big engines called America is also the leading country when it comes to electric/hybrid vehicles. No one in America forced people to pay high taxes yet a company like Tesla has set an unprecedented shift in automotive technology by going all electric. The companies shares soared from 30$ a share in 2012 to 240$ a share now. And Tesla is an American company that is a leader and if not the best automaker that makes the most advanced electric vehicles in the world. How many European automakers have achieved this ? The closest would be BMW but even their cars are not fully electric and their only model that can match Tesla’s model S is a hybrid BMW i8. All 3 American automakers offer either full electric or hybrid vehicles with a wide variety of choice (models, trim levels etc).

    Now, how many European car makers offer as much hybrid/all electric cars as American ones ? Very few. And yes despite the high taxes, Europe has once again failed to demonstrate that it is not higher taxes or the government that makes change or progress but capitalism and a business friendly environment where people can easily and freely invest their money to bring their ideas to life.

    Don’t forget that companies such as Tesla, Facebook etc… all create thousands of new jobs whereas in Europe high taxes haven’t even been able to force European automakers to go green and people still drive polluting diesels (yes diesel is more polluting than gasoline but again, because Europe could not bother with developing gasoline engines like America, they decided to lazily subsidise diesel as diesel inherently emits less CO2 in order to reach reduced CO2 levels required by the signed Kyoto protocol that America intelligently refused to sign).

    So what do we have ?

    A lower taxed, more personal freedom and business oriented America that has managed to freely shift its citizens idea to buy hybrid/electric cars. Yes gas is cheap, but in America there is no penalty. You have your freedom. If you want to buy a big car that pollutes more, you are free to do so. Yet a lot of Americans are still buying fuel efficient vehicles because either way buying a big engined car will cost you more money. Europe penalises you even more by adding taxes on top of that whereas America intelligently knows that if you pollute more, you will still be paying more out of your pocket because of using more fuel.

    Same thing with healthcare. Free public healthcare is good for a majority of poor people but is mediocre and the quality sucks. The worlds best hospitals and most successful treatments are all in America. In Europe you still have to pay for private insurance if you want to get covered at private hospitals. So if you are a wealthy or hard working person in Europe, you have no freedom of choice. If you want the best healthcare, you STILL HAVE TO PAY HIGH TAXES and then pay your private insurance on top that so that it covers your private hospital bills. In America you do not pay taxes for healthcare and if you working and want one, you just get a private insurance. Europe is a better place if you are homeless, broke, jobless or poor. America is a better place if you earn enough money and are working hard (the same hard working person in Europe will have a more difficult time getting richer due to taxes penalising and demotivating him).

    Not to mention America is becoming energy independent and in two years will be a net exporter of oil/gas whereas Europe will be running out of money and now with sanctions against Russia, Europe will be paying even higher prices for its energy imports.

    You can tax all you want and redistribute wealth. But eventually you will run out of other people’s money as you will not be creating/generating enough money compared to capitalistic/lower taxed society where people are free to do with their money and are do not receive any entitlement/benefit from the government which forces them to work or generate money in order to survive.

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