05/06/2013 Political Affairs and Democracy
Strasbourg, 05.06.2013 - “Revenue shortfalls due to tax evasion and aggressive tax avoidance practices of multinational companies, exploiting cross-border accounting to maximise their profits, challenge our democratic systems,” rapporteur Dirk Van der Maelen (Belgium, SOC) said at a hearing organised by the Political Affairs Committee in Paris today on the activities of the OECD.
Tax evasion by politicians and business people, as well as tax avoidance, e.g. legal practices used by multinational companies to minimise their tax bill through profit-shifting, deprive EU governments of one trillion euros, and undermine confidence in democratic institutions, participants were told.
They heard that much of today’s tax legislation is based on an outdated vision of economic activity dominated by fixed assets and with limited cross-border exchange. Consequently, in addition to a crackdown on tax evasion, wholesale tax reform is necessary.
Ideally, a “big bang” approach in the form of a concerted drive by major countries, whereby all tax havens are required to sign treaties with all countries, in place of the current incremental policy, an automatic exchange instead of the current information exchange, a unitary taxation of transnational corporations, together with the collection of meaningful statistics on offshore wealth, are indispensable to fight tax evasion and aggressive tax avoidance, participants concluded.
They agreed that PACE should urge the OECD to step up its fight against widespread illegal tax evasion, that continues to be encouraged by tax havens, and become a driving force for a new, comprehensive campaign of action against tax havens.