Speech given by Bernadette Ségol, General Secretary of the European Trade Union Confederation (ETUC)
STTK's International Conference on grey economy and tax planning
Helsinki, 31 October 2013
Mrs Minister,
Dear Mikko, dear Ninna,
Dear colleagues and friends,
You have invited me to speak on tax havens and tax policy coordination in Europe. I should perhaps start by saying that the ETUC so far does not have a comprehensive policy on taxation policy with a few exceptions like the FTT, the need to shift taxation away from labour to products and services that are harmful to the environment, and to have a common corporate tax base combined with a minimum tax rate. So far, taxation has not been a matter of great concern at EU level. But this is about to change, and I guess this is why you invited me to speak about the subject.
To the legal situation: the European Treaties stipulate only very few areas for the harmonisation of Member States' rules, mainly in the area of indirect taxation (principally the Value Added Tax and Excise Duties), and this because indirect taxes may create an immediate obstacle to the free movement of goods and the free supply of services within the Internal Market and create distortions of competition. But the internal market can also be the vehicle for profit shifting, tax evasion and fraud. This has led the European Commission to embark on a series of initiatives to counter these trends. Lately an expert group has been set up on taxation and the digital economy. This has been welcomed by the European council in October. However while specific initiatives are being taken related to the internal market, in general terms, taxation is a matter primarily of the Member States, not the EU.
Regarding the policy moves of the recent months which I will talk about in a moment, I believe that they have to do with the consequences of austerity policies in Europe and the tacit recognition that government policy needs more room for manoeuvre than is currently the case.
I will start with a few fundamental thoughts on these matters and the policy lines that ETUC member organizations have agreed on. In a second step I shall outline the current debate in the EU. Last but not least, I will outline how we believe that better EU coordination on taxes can achieve prosperity for all in a more Social Europe.
Let me start by putting forward some figures on the development of taxation across the European Union. Since the crisis started in 2008, VAT has increased in more than half the European member states (15 out of 28) with an average increase of 1.5 % points between 2008 and 2012. Income tax has risen by 0.8 % points despite the discourse on shifting taxation away from labour. The steep decline in corporate tax rates seems to have levelled out at an average rate of 22 % points in 2011, but still down by 10 % points since 1995. But most worrying, in times of depressed when tax revenues is the most needed to stabilise the economy the tax ratio (tax revenue as % of GDP) is down from 39,4 per cent in 2007 to 38,4 per cent in 2008. Meanwhile the Commission and the Parliament estimate that 1 trillion € in public money is lost due to tax fraud and tax avoidance, every year, in the EU.
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