In a letter to Algirdas Semeta, European Commissioner responsible for taxation, customs, statistics, audit and anti-fraud, Vincent Derudder, chairman of the Federation of European Financial Intermediaries (FECIF) agreed with the importance of stopping tax evasion, but said the way some countries are looking to tackle it is likely to be overly burdensome on smaller companies.
“For growth and jobs in the EU, we know that we need quality tax systems which support companies and promote a favourable business environment,” said Derudder.
“Therefore, it is perfectly acceptable for each Member State to strive for a competitive tax system, so long as they do so in a fair and open way. Tax competition goes with freedom of circulation and establishment and should not be restricted. It is not proper that perfectly legitimate tax planning may end up being viewed as abusive if it generates normal tax advantages.
“Arguing that it is legal but that that does not make it right is a very dangerous statement to make in an environment where arbitrary measures seem to be the rule already.”
SMEs pay too much
The organisation, which represents a wide cross-section of financial intermediaries through its 19 member bodies based in 16 countries, also conducted a survey of its members to ascertain their feelings towards the measures being introduced.
FECIF said 82% of its members believe the tax environment in Europe is not helping the economy to expand and 75% feel it is putting off foreign investors. In addition, FECIF said 78% feel the tax environment is not fair for its members as they pay too much while large corporations do not pay enough.
In the strongly worded letter (a copy of which can be viewed here), Derudder said it is not just the initiatives themselves which are damaging, although he did highlight HM Revenue & Customs use of informers, particularly divorcees, as one less than desirable tactic, but rather the image of Europe this conveys to the world.
“The real need today is to ease on austerity and focus on growth, as when there is a crisis, lack of economic growth, increasing unemployment – regulation and more regulation is not necessarily the right answer,” said Derudder.
“New regulations will not boost investment nor retain or create jobs. EC proposals must demonstrate clear benefits for citizens – citizens need better, not more regulation.
“Most of the regulatory initiatives of the EC are excessively burdensome for our members with no real or perceived benefit for our clients who are paying the disproportionate costs of such extra regulation.”
