Tem­pests in tax havens

Kathimerini English - - Front Page - BY NIKOS KONSTANDARAS

The claim that Lux­em­bourg has been of­fer­ing neg­li­gi­ble tax rates to multi­na­tional firms might just con­vince Euro­peans of the need to har­mo­nize their tax sys­tems. It is clear we can­not con­tinue in a sit­u­a­tion whereby some coun­tries – and parts of coun­tries – can go on pro­vid­ing ser­vices which, in the end, de­prive oth­ers of rev­enues. When Greece has been sucked dry by aus­ter­ity, high taxes and a lack of in­vest­ment, when many EU coun­tries are strug­gling to meet their obli­ga­tions to their cit­i­zens and part­ners, it is inconceivable that tiny Lux­em­bourg should have at­tracted at least 340 com­pa­nies and in­vest­ment funds with almost 3 tril­lion euros. With this, Lux­em­bourg’s cit­i­zens en­joy the sec­ond-high­est per capita in­come in the world, after Qatar. A re­cent re­port by the US-based In­ter­na­tional Con­sor­tium of In­ves­tiga­tive Jour­nal­ists claimed that some com­pa­nies were of­fered tax rates as low as 0.25 per­cent. Of­fi­cially, cor­po­rate in­come tax in Lux­em­bourg is 22.5 per­cent. Among EU coun­tries, tax rates in Ire­land (12.5 per­cent) and Ger­many (15.8 per­cent) are at the low end, whereas in France (34.4 per­cent) and Bel­gium (33.9 per­cent) they are at the top. In Greece the rate is 26 per­cent. With var­i­ous breaks and ben­e­fits, in many coun­tries the fi­nal rate is much lower than the nom­i­nal one, but the very low rates that com­pa­nies were asked to pay in Lux­em­bourg (as well as in Ire­land and the Nether­lands, with a nom­i­nal tax rate of 25 per­cent) in­di­cate that the sys­tem is skewed. Ac­cord­ing to EU treaties, each coun­try has the right to set its own tax rates. Even when Ire­land was forced to ask its EU part­ners for a bailout, French Pres­i­dent Ni­co­las Sarkozy failed in his ef­fort to force Dublin to raise taxes. In this way, Euro­pean Com­mis­sion Pres­i­dent Jean-Claude Juncker is cor­rect when he says that Lux­em­bourg’s tax reg­u­la­tions are not il­le­gal. What many ob­serve, though, is that they are un­eth­i­cal, of­fer­ing com­pa­nies and in­di­vid­u­als the op­por­tu­nity to avoid pay­ing taxes in the coun­tries where they earned their prof­its. There is also the ques­tion of whether any com­pa­nies re­ceived spe­cial treat­ment. De­fend­ing him­self in the Euro­pean Par­lia­ment, Juncker, who dom­i­nated pol­i­tics in Lux­em­bourg for over two decades, de­clared that the Com­mis­sion will in­ves­ti­gate the is­sue and will pro­pose ways to har­mo­nize tax sys­tems and ex­change in­for­ma­tion be­tween coun­tries. The G20 sum­mit in Bris­bane this week­end is ex­pected to deal with tax eva­sion, among other is­sues. Ev­ery­where there is a press­ing need for more funds and greater jus­tice, so the time has come for many coun­tries (and parts of coun­tries, such as the Chan­nel Is­lands) to lose the priv­i­leges which al­lowed them to get rich at the ex­pense of oth­ers. Greece will gain from this only if it com­bines tax har­mo­niza­tion with greater sta­bil­ity in its tax sys­tem and with an im­prove­ment in the dis­pen­sa­tion of jus­tice in is­sues per­tain­ing to in­vest­ment and tax­a­tion. This is our chal­lenge.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.