Strong action plan agreed by European Parliament to tackle tax dodging

The Greens/EFA group in the European Parliament is calling on the European Commission and European Council to take immediate steps to turn the recommendations of the Panama Papers inquiry into action.

This week the European Parliament voted in favour of the report and recommendations of the Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA). The report and its recommendations include a number of Greens/EFA policy demands [1].

Molly, who was shadow rapporteur for the report, said:

“We now have a strong action plan for clamping down on the immoral and corrupt activity revealed by the Panama Papers scandal. To make tax justice a reality, the Commission must now turn this plan into legislative proposals.

“However, the real enemy of tax justice in Europe has been the prime ministers and presidents of EU governments. They have treated the demands of their citizens with contempt. If they continue to block progress on key tax legislation then the Commission should force their hand and present legislative tax proposals under co-decision in 2018.

Molly warned that Brexit could be used as a way for the UK to continue to avoid measures to tackle tax avoidance, or even increase the likelihood of tax dodging:

In the UK Brexiteers would be happy to see a race to the bottom. Avoiding civilized rules on tax was always part of the Brexit agenda. Indeed, the Tories have explicitly stated that being one of the world’s major tax competitors will be a cornerstone of economic policy after the UK leaves the EU.

“The EU must not stand for this. It must insist that any future deal with the UK ensures a clear commitment by the UK to meeting the same standards on tax regulation that are met by the remaining EU27.”

[1] Background

The Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) began its work in July 2016, following demands from Greens/EFA and others.

One of the key tools for combatting tax evasion and avoidance is public country-by-country reporting. The European Parliament adopted proposals in July, but progress has stalled in Council.

Some of the key Greens/EFA achievements in the recommendations are:

  • Establishment of a Permanent Inquiry committee in the European Parliament on the model of the US Congress
  • No companies or intermediaries involved in tax havens to benefit from EU funding
  • To end the blockade in Council, to end unanimity in Council for tax policies and for the European Parliament to be given co-decision
  • Offshore companies should be subject to the same auditing and disclosure obligations as in Europe
  • The Commission to investigate Member States and possible breaches of EU law
  • Call to separate accounting and advising activities of accountancy firms