Tax and economic crime
– an assault on social justice:
a challenge for state and society
(Committee decision of 7 September 2000)
I.
In Europe, tax and economic crime are growing at an alarming
rate. They are increasingly taking on forms of organized crime. An essential
component of this is money laundering. Its volume is estimated at up to 20% of
the GNP of European countries.
This has the following impact:
· The tax burden on law-abiding
citizens is increasing as economic and tax crime are placing an ever greater
burden on public spending.
· Social solidarity is being
destroyed as employees in particular are being burdened with taxes to the
limits of their economic ability, while economic and tax offenders earn juicy
profits at no risk.
· This is an assault on both
social justice and the social state based on the rule of law.
II.
The reasons for this worrying development are many and
varied. Nevertheless, one of the primary reasons has been well known for some
time now: the wretched state of the European tax and customs administration
authorities.
1. A dangerous vicious circle can be seen here: most
European financial administration authorities are cutting back on staff as
part of budgetary consolidation, while their responsibilities are growing
dramatically. This supposed budgetary consolidation is therefore having the
opposite effect: it is leading to a crisis in public spending.
2. Legal impediments are preventing tax and customs
regulations from being enforced. A prototypical example is so-called bank
secrecy, which blocks the finance authorities’ powers of investigation and
protects tax criminals, not the banks’ customers.
3. Globalization has led to the increased networking of
economic activity. The cross-border application of laws is becoming
increasingly complex and less and less transparent.
4. E-commerce hinders, even prevents, tax bases from
being investigated to an extent as yet unknown.
III.
Therefore, one of the primary tasks of European politicians
must be to enable the financial administration authorities to fulfil their key
role at national and European level. UFE therefore calls for an immediate
political reorientation and upheaval by means of a seven-point plan:
1. by providing tax administration authorities with
sufficient staff and equipment,
2. through attractive working conditions and performance
incentives,
3. through state-of-the-art computer concepts,
4. by creating professional prospects. Here, two elements
are inseparably linked:
· the creation of attractive
professional promotion prospects and
· the prospect of old-age
provisions safeguarding employees’ standard of living. The on-going
discussion on the continued existence of old-age pension schemes threatens
not just social security, but also motivation and productivity among those
employees concerned.
5. One example of legal guidelines hindering
investigations is bank secrecy and the insufficient recording of interest
income on cross-border payments.
UFE calls on the EU governments to agree on common
regulations for taxing investment income in the European Union. The Feira
compromise does not go far enough: it is riddled with derogations and may
not be enforced before the year 2010. The fair recording of investment
income cannot wait until then.
Once again, UFE reaffirms the so-called co-existence
model, which specifies either a withholding tax of 20% or a duty for banks
to inform local tax offices.
6. UFE calls for the effective combating of forms of VAT
fraud triggered by the country of destination principle by providing the
European Anti-Fraud Office (OLAF) with more staff. The small number of staff
responsible for combating VAT fraud is insufficient to fight against such a
dangerous form of tax crime.
7. Furthermore: official and legal assistance should be
strengthened in Europe. It is essential to have unbureaucratic assistance
for the investigation authorities, i.e. they must be able to operate beyond
national borders. Here, OLAF should be given a coordinating role. The police,
customs and tax investigation authorities, who are the first to deal with a
case, must inform the other investigating bodies immediately with the
participation of OLAF.
8. Last but not least, in order to combat tax fraud
effectively throughout Europe, a computerized system should be devised in
all member states using the same criteria and the direct exchange of and
access to information all over Europe should be provided by OLAF.
IV.
The eleventh hour has arrived. If through a set of
complementary organizational and staff measures, the tax and customs
administration authorities in Europe are not finally allowed to fulfil their
role, then the door will remain open to tax and economic crime. Combating tax
and economic crime is therefore a challenge not just for European financial
policy, but for the government and society itself.
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