* EU tax evasion, avoidance comparable to total output of
* Issue to be discussed at next EU summit in May
* Pressure on Austria to conform to EU rules on transparency
* Switzerland, Liechtenstein fear they next in line
By Luke Baker
BRUSSELS, April 12 Tax dodging causes the
European Union to lose around 1 trillion euros of income each
year, the president of the European Council said on Friday as he
announced that EU leaders would discuss the issue at a summit
This haemorrhage of tax revenues is equivalent to the entire
annual economic output of Spain, and far exceeds the total of
about 400 billion euros committed to the bailouts of euro zone
member states Greece, Ireland, Portugal and Cyprus.
"We must seize the increased political momentum to address
this critical problem," Herman Van Rompuy, who chairs meetings
of EU leaders, said in a statement broadcast on the Internet.
"Tax evasion is unfair to citizens who work hard and pay
their share of taxes for society to work. It is unfair to
companies that pay their taxes - but find it hard to compete
because others don't."
Van Rompuy's message, and the addition of the issue to the
agenda of the summit in Brussels on May 22, will add to pressure
on Austria to conform with the rest of the EU on sharing
information about bank depositors.
Austria is the only one of the EU's 27 member states
unwilling to sign up to EU rules on the automatic exchange of
depositor data, with the finance minister intent on protecting
Austria's long history of banking secrecy.
EU policymakers say having all EU countries signed up to the
EU savings directive, the piece of legislation that calls for
sharing of depositor data, will help to combat tax evasion.
Luxembourg, which has the biggest banking sector in the EU
relative to its gross domestic product, announced this week it
was willing to sign up to the directive from January 2015,
leaving Austria as the only EU stand-out.
The shifting tide has raised alarm in Switzerland, the
world's biggest offshore banking centre with $2 trillion in
assets, as well as in neighbouring Liechtenstein.
The Swiss Bankers Association said on Wednesday it did not
see automatic exchange of information as an option for
Switzerland because it is not part of the EU, noting there is
currently no EU mandate for negotiations on the subject.
Liechtenstein Prime Minister Adrian Hasler told Swiss
television on Thursday his country was well aware of mounting
pressure over the issue. "The financial centre knows that at
some point it may go in this direction now that there is a
certain momentum in the question," he said.
EU finance ministers, meeting in Dublin on Friday, discussed
the problem, which Germany and the European Commission have said
they are determined to tackle so as to close tax avoidance
Van Rompuy said around one trillion euros was being lost
across the EU each year because of tax evasion and avoidance.
"To give you an idea, one trillion euros is about the same
as the entire GDP or total income of Spain, the fifth biggest
economy of the European Union," he said in his video message.
"It is about the same as the Union's budget for the full
seven years ahead. And it is one hundred times more than the
loan that was recently agreed for Cyprus."
With taxpayers providing the backstop for the 500 billion
euro rescue fund the euro zone has created to tackle the debt
crisis, ensuring that tax revenue does not leak out of the
system through evasion is all the more pressing.
"Tax evasion is a serious problem for countries that need
resources to restore sound public finances," Van Rompuy said.
"The current economic crisis only helps to stress the urgent
need for fair and effective tax systems. We simply cannot afford
nor tolerate tax complacency."