Toward fiscal unity

The EU has echoed complaints from various countries, Spain included, that have spoken out against abusive tax practices used by multinational countries. It prepared a list of 34 strategies that it will put in place this year in an effort to do away with tax fraud and tax evasion.

This is no small issue. Each year EU member states lose 150 billion euros to unpaid taxes (which involves direct legal violations) and tax evasions (which involve tricky maneuvers to find legal loopholes around taxes). Mutlinationals operating in Spain and the UK like Microsoft, Google, Facebook and Amazon pay most of their taxes in Ireland, which offers the most attractive tax shelter for them. Low taxes in Ireland led these companies to change their headquarter locations. The ideal solution would be to create tax unity across the EU, but several states express their doubts about such a move because it would interfere with sovereign rights.

Still, some measures seem to be going toward that solution. In keep tax evasion from affecting agreements about double dividends, the EU suggests that the European Commission negotiates these agreements collectively for the entire EU. For example, a common tax identification number is being considered and collective tax investigations, too. The member states should overcome their doubts, because promoting fiscal unity will increase their overall revenues and avoid treating taxpayers unequally.