Sharon's Report On VAT Fraud Backed By Parliament (Sharon Bowles MEP)

Sharon Bowles MEP <info@sharonbowles.org.uk>

Sharon's Report On VAT Fraud Backed By Parliament

September 2, 2008 5:00 PM

Fraud The European Parliament has backed a report by Sharon Bowles that aims to break the prolonged EU deadlock over fighting VAT fraud.

The report's key recommendation is to levy VAT of 15% on all cross-border EU trade on goods and services. Under the proposals, Member States would charge a top up rate to bring the total VAT charge in line with current levels within their own countries. For example, the UK which has a VAT rate of 17.5% would charge 2.5% on all imports under the new system. The 15% levied by the exporting Member State would also be paid to the UK.

Commenting on the vote, Sharon said:

"Member States alone cannot deal with tax fraud because fraudsters are exploiting cross border loopholes. Only through the EU can a solution be found and it is clear by the overwhelming majority that backed the report today that this issue has transcended political and geographical boundaries. Clearly, many people have been motivated by the sheer loss of revenue that fiscal fraud causes governments every year. The total annual loss, estimated at around EUR 200-250 billion, is double the annual budget of the European Union. Fiscal fraud costs 2.5% of GDP and a huge chunk of the tax base. If any politician here or in a Member State campaigned on the basis of putting up tax by 5% to pay for nothing they would not get very far, but that is what tax fraud costs the honest taxpayer and why politicians must act.

"VAT fraud alone is said by the European Commission to cost exchequers EUR 40bn (£31bn) a year, roughly the same as the EU spends on the Common Agricultural Policy. In the United Kingdom, HM Revenue and Customs estimate that in the tax year 2005-2006 VAT revenue losses amounted to £14.4 bn.

"It is now for the European Council to stop dragging its feet and show genuine political will in achieving the elimination of such costly fraud. We need greater trust between national administrative authorities when it comes to sharing information on fiscal fraud, and a real will to change the cross border VAT system. This is simply not a problem that can be solved at member State level and it is for this reason why I am highlighting it as a priority for the EU."

ENDS