Austerity helps tax dodging according to EPSU's new research

(25 March 2013 - Press Communication) New research released today by the European Federation of Public Service Unions (EPSU), as part of its closing the European tax gap campaign, shows impact of austerity on tax collection services.

The research seeks to contribute to the ongoing debate in the EU institutions on a new action plan against tax fraud and avoidance.

It reveals that since the start of the crisis, instead of investing in tax services that collect much needed revenues to finance public services and redistribute wealth, 24 governments out of 28 (EU + Norway) are doing the opposite by reducing jobs.

In total, almost 50 000 jobs in tax services have been axed between 2007 and 2011. The scale varies between countries: a third of tax workforce in Denmark, a fifth in the UK, a sixth in Latvia and Lithuania. In most countries, further job cuts are planned with no attempts at assessing the impact of 5 years of cuts.

The research shows the impact of the cuts on the efficiency of tax administrations with fewer checks and controls, backlog, loss of experienced staff and overworked remaining staff. Although an increased use of IT and new working measures has the potential to allow more efficient services, the evidence suggests that this is not a short term solution.

The report shows that reducing employment in tax services undermines the good intention to tackle tax dodging. Cutting jobs will cost money rather than save it. It is hard to understand the logic of cutting off the lifeline of social welfare.” says Carola Fischbach Pyttel, EPSU General Secretary.

The research provides examples of how much revenue employees bring in and how much is being lost by cutting staff. For instance, in Denmark, it is estimated that 400 job cuts in tax administration cost society more than €1.3 billion of non-collected tax. In the UK, in shedding more than 3300 staff, €1.2 billion of additional revenue was lost.

It is estimated that around € 1000 billion per year are lost as revenue in the EU as a result of tax fraud and tax avoidance. Our campaign builds on workers and citizens’ legitimate anger to have to pay for a crisis they didn’t cause whilst wealthy individuals and large companies will find it even easier to pay little or no taxes. We urge Parliament and Council to beef up the proposed EC action plan against tax fraud and support investments in tax services to make it effective”. Adds Mrs Fischbach Pyttel.

- You can find the research report by the Labour Research Department (UK) here.

For more information contact, Pablo Sanchez psanchez@epsu.org, 0032 474 62 66 33

EPSU is the European Federation of Public Service Unions. It is the largest federation of the ETUC and comprises 8 million public service workers from over 275 trade unions; EPSU organizes workers in the energy, water and waste sectors, health and social services and local and national administration, in all European countries including in the EU’s Eastern Neighborhood. EPSU is the recognized regional organization of Public Services International (PSI).

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