EU Finance Ministers fail to take bold stance on tax dodging

Meeting today in Brussels, European Finance Ministers failed to take bold action against tax evasion and avoidance, leaving a great deal still to be achieved at next week’s EU leaders’ summit.

While Ministers struck a deal to negotiate with five neighbouring countries on the possible exchange of tax information on an automatic basis, there was no other concrete response to measures put forward by the European Commission, including greater transparency regarding the real owners of offshore companies, and the ‘blacklisting’ of tax havens.

Reacting to this outcome, Catherine Olier, Oxfam’s EU Policy Adviser, said:

“Ministers have missed an opportunity to match their ambitious rhetoric with far-reaching commitments aimed at ending harmful tax practices which deny governments the resources they need to provide public goods and services to millions across the world. This is not to mention the billions of euros in additional revenue which EU governments would stand to gain at a time of massive cuts in public spending. We now hope to see EU leaders walk the talk by taking meaningful action next week.

“Agreeing to create a single European and publicly available ‘blacklist’ of tax havens would have been a significant step forward, allowing EU Member States to impose coordinated and more effective sanctions against tax havens and the companies abusively using them.”

Oxfam welcomes the Ministers’ agreement to discuss automatic exchange of information with neighbouring countries as an important starting point, but warns that Member States must maintain a unified stance and ensure the EU pushes forward similar efforts on the EU itself and on the international scene, most notably at June’s G8 summit.

“Much remains to be done, including difficult negotiations with Switzerland, if the EU is to see this process through and champion the automatic exchange of information at the global level,” added Olier. “Only by adopting and extending this system beyond Europe to the developing world can the EU promote lasting change, because it is the poorest who suffer most from tax evasion, and it is their governments who need this information to fight for money which is rightfully theirs.”

Notes to Editors

• The five states with which the European Commission will be re-negotiating EU savings tax agreements are Switzerland, Andorra, San Marino, Monaco and Lichtenstein.

• The European Commission estimates that tax evasion and avoidance costs the European Union €1 trillion each year. In addition, it is estimated that up to a quarter of worldwide global wealth – between $21 to 32 trillion - is held in tax havens, according to Tax Justice Network, as much as the American and Japanese GDPs put together. If these assets were taxed accordingly, they could yield at least $189 billion in additional tax revenues.

• Tax avoidance relates to the use of legal (but immoral) methods to modify someone’s financial situation in order to lower the amount of tax owed. Tax evasion is also known as tax fraud and is an illegal practice where a person, organization or corporation intentionally avoids paying its true tax liability.