EC: 2012 country-specific recommendations in the context of the European Semester in the area of taxation

On 30 May 2012, European Commission published responses to Frequently asked questions about 2012 country-specific recommendations in the context of the European Semester [see MEMO/12/386]. 

EU Commissioner for taxation, Customs Union, Anti-Fraud, Audit and Statistics, Algirdas Šemeta, held a Press Conference on Country specific recommendations in the context of the European Semester  [see SPEECH/12/400].

In his speech, EU Commissioner said that the quality of taxation can be a „make or break” factor in Member States’ efforts to consolidate budgets and establish sustainable economic growth.

The EC recommendations in the field of taxation are focused largely on 5 areas which are fundamental to quality tax systems, namely:

–  labour taxation in many Member States is still too high, and not enough has been done to shift this burden towards more growth-friendly taxes. Taxation can incentivise work and employment, but only if smartly designed. The opportunity for a smart tax shift is too frequently being missed.

–  environmental taxes are among the most growth-promoting.  Many Member States are still not exploiting the full potential of environmental taxes.

–  property taxes, taxation which incentivises debt and encourages housing bubbles must be phased out. Sensible taxation of property is growth-friendly, but it is not being utilised enough.

–  the untapped potential in the national tax system. Where the base can be broadened and tax gaps closed, this should be done. A tax system full of tax breaks means less revenue and unfair burden-sharing across society.

–  tax evasion and avoidance lead to revenue , ordinary citizens could potentially carry a lighter tax burden if everybody paid what they owed.  Tax evasion and avoidance lead to revenue losses of around €1 trillion a year.