EPSU Tax Justice Meeting: Tax evaders welcome austerity

10 October 2013, Luxembourg
(11 October 2013)

During the Tax Justice meeting on 9 October in Luxembourg, the EPSU secretariat presented an update of the European Commission’s plans against tax havens and corporate tax avoidance including the setting up, last June, of an advisory experts’ group on good tax governance putting together national tax ministry officials, civil society including EPSU, as well as business and tax advisers.

EPSU has welcomed the EC action plan but to be effective it must be binding, backed by non- compliance sanctions, more human and material resources and have a broader scope including tax havens not only outside the EU but also within the EU. The EC tough line on tax fraud and avoidance stands in contradiction to the binding recommendations in the European economic governance on cuts in public spending that also involve tax administrations.

The EC advisory group is a positive recognition of EPSU as the leading trade union federation for tax administrations but its unbalanced composition and involvement of organisations advising on tax planning is a strong concern.

Latest on a Financial Transaction Tax



An update was also provided on the draft directive for a Financial Transaction Tax (FTT) supported by 11 EU governments – Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain . EPSU stressed the need to revitalise trade union mobilisation as some governments are reported to be scaling down their initially strong commitments under pressure from a continuous onslaught by industrial and banking lobbies.

To revive support for the FTT and stem the corporate assault, a Financial Transaction Tax Now web petition will shortly be launched targeting the 11 pro-FTT governments (www.financialtransactiontax.eu). The EPSU secretariat also announced the launch of its new website against corporate tax fraud and avoidance (www.notaxfraud.eu). EPSU staff and affiliates also took a picture to support the EPSU workplace action against austerity and for alternatives.



Impact of austerity



The Labour Research Department (UK) presented its state of research commissioned by EPSU on the impact of austerity in tax administrations in Europe. Some of the key findings were that the overall number of tax administration employees decreased by 9% across Europe since 2008, amounting to a total staff reduction of more than 50000.

The findings also indicate that well staffed tax administrations can generate additional income thanks to higher tax compliance. In turn income is lost when the staff is reduced, which seriously questions the austerity related staff cuts in the tax administrations of some European countries. Also there does not seem to be a connection between tax rates and tax compliance, as a matter of fact some of the countries with the highest tax rates in Europe also have the highest rates of tax compliance.

The study also took OECD findings into account that suggest that tax evasion is harmful not just to governments, and individual tax payers, but also to local companies that cannot compete with the aggressive tax planning strategies of multinational corporations that can avoid paying taxes by moving their profits to low tax entities. More job cuts are planned in Belgium, Denmark, Finland, France, Italy and the UK.

These findings resonated with the experience of EPSU affiliates in their respective countries. Sweden is one of the countries with the highest tax rates in Europe, and increased the tax administration staff resulting in a high compliance rate and an efficient tax collection. Norwegian affiliates voiced concern at the new government’s promise to reduce taxes because it jeopardises the success of Norway’s social policies. Denmark experiences that the insufficient number of staff leads to loosing larger amounts of public revenues as well as citizens’ trust in the tax system.

Austria concluded that staff reductions lead to loss of income even when technological improvements are introduced. Spain experiences the full consequences of staff cuts resulting in an increase in tax fraud and tax avoidance further straining public finances. This is compounded by a law in Spain that offers amnesty to offenders if they agree to pay 10% of the amount they withheld fraudulently, which continues to be in place due to political unwillingness as law changes are likely to affect corrupt politicians as well.

Trade union campaigning was successful in the Netherlands where the government responded to the efforts and research by EPSU affiliate, Abvakabo, demonstrating the devastating impact of austerity on tax collection by hiring 1600 additional staff. This is encouraging for EPSU and its affiliates to continue pressing for more staff and resources in tax administrations.

In Germany, EPSU affiliate Verdi, has been running a campaign for the past 3 years on fairer and more progressive taxation to redistribute wealth and income and finance the welfare state and public services. The campaign calls for higher corporate tax rate, which have reached an unprecedented low since tax law changes from 1998 onwards. The campaign also includes a demand for a new tax on wealth and top income that could raise €40 billion per year as well as a Financial transactions Tax. Ver.di gave an update on the campaign that is run in cooperation with tax justice groups such as Attac and that is proving to be very popular.

Global picture



PSI reported on the global scale of tax evasion and highlighted some of the challenges to the global tax regime. The current system essentially dates back to the end of the First World War and the OECD is currently faced with the question of whether this system should be fixed to accommodate current developments such as corporate profits shifting to lower tax regimes or be replaced by a new system altogether.

PSI pointed towards California as a good example for an alternative tax regime. The California model would tax companies globally on the totality of profits and redistribute the income generated from taxes to the respective national governments based on real economic activity. The California system was a response to tax evaders moving their profits to neighbouring US states.

PSI is currently active in an OECD monitoring committee, and announced future plans for the potential establishment of an independent international tax reform body and of a PSI global tax justice network.

War on Want project



War on Want, a UK social justice campaign group, presented its EU-funded project in partnership with EPSU and affiliates from the UK (PCS), Sweden (ST) and Ireland (PSEU) to raise awareness on the global impact of tax injustice on developing countries. Although the challenges are similar to the ones in the developed countries these states suffer disproportionately from the deficits that result from lost tax revenue.

War on Want campaigners introduced their educational material to be designed for a trade union audience including games, leaflets and a video on a concrete case study of corporate tax avoidance in Gambia. More EPSU affiliates are welcome to join the project that will last until end of 2015.


- LRD presentation on job cuts in tax services, in EN




- War on Want/PCS/ST/EPSU project on tax justice, in EN





- Verdi campaign for tax justice Umfairteilen, in DE



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