The basic positions on tax could hardly be more different: virtuous tax competition or criminal tax fraud?




The official Swiss view is that tax competition is healthy. Not only do federalism and [direct] democracy promote sound public finances, but they also enhance trust between citizens and the state, said then President of the Confederation (Bundespräsident) Hans-Rudolf Merz in a lyrical speech 2 November 2009: Die Schweiz im internationalen Steuerwettbewerb.



European Union



The Communication by the European Commission Promoting Good Governance in Tax Matters; Brussels, 28.4.2009 COM(2009) 201 final takes almost the contrary position, calling for urgent action to stem tax fraud and evasion through coordinated action:

The European Union and its Member States face serious challenges in addressing the current economic and financial crisis. The crisis has exacerbated concerns about the sustainability of tax systems in the face of globalisation. The promotion of good governance in the tax area on as broad a geographical basis as possible is now recognised to be the appropriate way of addressing these concerns. It balances the tax sovereignty of individual countries with the legitimate protection of tax revenues.

Accordingly, the EU and its partners have a strong common interest at this time in promoting tax cooperation and common standards on as wide a geographical basis as possible. The time is now right for Member States and third countries to work together and to encourage and support the move that has now started towards a broader acceptance of international standards of tax co-operation

This Communication presents for consideration a series of steps to promote good governance in the tax area, entailing action both within and outside the EU and both at EU and at individual Member State levels. ---

A few days ago, in the European Parliament, the Committee on Economic and Monetary Affairs overwhelmingly voted on a report (A7-0007/2010) on promoting good governance in tax matters, echoing calls for resolute action. (Procedure (2009/2174(INI)); rapporteur: Leonardo Domenici).




The third major political EU institution is the Council. In the pipeline is a draft Council decision (document 16308/09; only partially declassified 6 January 2010) to authorise the Commission to open negotiations between the EU and its member states with the Swiss Confederation to combat direct tax fraud and direct tax evasion and to ensure administrative cooperation through exchange of information on tax matters. (Negotiations are also foreseen with Andorra, Monaco and San Marino.)



Switzerland and Germany


There are also bilateral issues between individual EU member states and Switzerland. The most visible right now is the potential circumvention of the legendary Swiss banking secrecy contemplated by Germany through buying stolen bank data.



In the press release Federal Council takes decision on further course of action concerning Germany (3 February 2010), the Swiss executive stated that it is not willing to provide administrative assistance to Germany based on stolen bank data, but it is willing to continue negotiations on a new double taxation agreement (DTA), in accordance with the OECD Model Tax Convention.




The Swiss decision comes as a reaction to German reports. According to Deutsche Welle the German government is likely to buy stolen bank data on possible tax evaders: Germany willing to pay for secret Swiss bank data (1 February 2010).



As we see, there are contentious issues between the European Union and its member states, on the one hand, and Switzerland, on the other hand.







Ralf Grahn







P.S. The BBC’s Europe editor Gavin Hewitt writes a blog, which presents European politics to readers in Britain and worldwide.

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The ‘democratic deficit’ in the European Union is perhaps one of the few things that almost everyone knows about it. Throughout at least all the ‘old’ democracies of Europe, there is a widespread feeling that the European institutions ‘steal’ away powers that were previously in the hands of the people when they were at a national level. In the newer member states, faith in the European institutions may be higher, but citizens do not feel the ability to influence their direction.

These impressions (however false may be the picture of the nation state implicit in the first of them) will only be dealt with directly by a strong agenda of putting the citizen at the centre of European decision-making. There is only one European institution that can do that: the European Parliament, and it has to start making itself heard louder. This is why European Alternatives has started a campaign for the Parliament to insist that it has the dominant role in deciding the policies of the Union.

The European parliament already has many of the formal powers of national parliaments. It must approve the nomination of the European Council for the President of the Commission, and it must approve the appointments made by the President to the different Commission posts after grilling them over lengthy parliamentary hearings.  The Lisbon Treaty, which entered into force on the 1st of December 2009, does improve the importance of the European Parliament by making co-decision the ‘normal’ legislative procedure of the European Union. The European Commission keeps its monopoly on the power to propose legislation, but the European Parliament now has to agree, along with the European Council of member states, in most areas of European legislation before it can become law.

But this is not the sort of thing that will tackle the citizens’ view of Brussels as an undemocratic bureaucracy. For that problem to be tackled, European politics has finally to become fully political – which is to say, fully democratic.

This means a substantial change in the way the European institutions think of themselves: up until this point, the European Commission has been conceived as the ‘party for Europe’, which must drive forwards the European project on the basis of consensus between member states. But this hegemony of the Commission no longer has a sense, and particularly so when an increasing number of the issues it is called to deal with – from climate change to migration – are of a clearly political nature with differing opinions existing across the political spectrum and transversally across member states. These political choices by their nature go beyond national political spheres, and so have to be articulated at a European level. Relying on national parliaments or politicians to formulate or explain these choices is self-defeating : the choices have to be made at a European level, and citizens have to be given a chance to directly influence this level of decision making.

It is for this reason that the European parliament must become the debating chamber of competing views of the future direction of Europe, articulated by meaningful European political parties. These competing visions must be identified with personalities from the parties, and the winning proposals must have a real impact on European legislation.

The key to all this is the last point: the moment the European parliament has the possibility to propose European legislation, the political discussions will assume a new importance. At the moment, the European Parliament can only approve or reject laws promoted by the European Commission, but it cannot of its own accord push through any legislation. This hinders the possibility of European parties becoming identified with clear policy choices for Europe.

But if the parliament were granted a direct influence in European law-making, this would allow the European political parties to take a public stance on key policy areas, and campaign in European elections on the basis of a meaningful manifesto that is common across member states. What legislative steps is the socialist party going to take to safeguard social services in Europe? Are the Greens going to propose a Carbon Tax on polluting industries? What common European asylum policy is the conservative party going to promote?

The common objection is that this would require a change in the European treaties, and after the bumpy process of Lisbon no-one is in any mood for another ride. But as we state in our campaign manifesto, no immediate change in the treaties is required for this to happen: the formal power to initiate legislation can stay with the Commission, all that is needed is an agreement that if the Parliament decides that certain legislation is necessary, the Commission should come up with a proposal within a reasonable timeframe.

The European elections in 2009 were the first in which some of the European Parties made a serious effort to have a common manifesto throughout the Union, but these manifestos were often ignored by the national member parties of the European parties, who campaigned on national issues. Even when genuinely European promises were made, citizens generally felt these amounted to little more than rhetoric, for lack of a clear connection between the European electoral contest and European law-making.

Now in the first months of the implementation of the Lisbon Treaty, the parliament must take the opportunity to insist on its importance, in order to give to the representatives of the citizens the power to decide on the direction of the Union. Up until now the Union has relied on the nation states to provide its impulse. The passing of the Lisbon Treaty must be made into the occasion where the citizens are finally given the right to be in the driving seat.