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BackRecently, the tax policy in the European Union has again become somewhat of an explosive issue. Newly published studies of the Commission show that in the area of the EU28 countries taxes on labour are the greatest source of tax revenue. It was explained during the course of the European Semester that Austria shows a very high tax burden in respect of labour. Within the scope of a panel discussion this week, AK and ÖGB have taken these worrying tax policy developments as an opportunity to refer not only to the high tax burden but also to the effects of tax dumping.
Gap between rich and poor continues to widen
The host Marlies Stubits (Permanent Representative of Austria to the OECD) was joined in the panel discussion by Erich Foglar (ÖGB President), David Begg (General Secretary of the Irish Congress of Trade Unions ICTU), Heinz Zourek (Director General on Taxation and Customs Union of the EU Commission) and Michael Förster (Senior Policy Adviser OECD). Förster presented some results from his work with regard to the development of income inequality in OECD countries. He pointed out that since the 1980ies the gap between rich and poor had been continuously widening. Due to the aftermath of the economic crisis and public spending cuts, inequality had risen again in recent years. It had to be pointed out specifically that in most OECD countries, including Austria, the poorest 10 % of all households showed a higher loss of income than the wealthiest 10 %.
Failed tax policy in Austria
Erich Foglar believes that the imbalance in Austria is among other also the result of a failed tax policy: The tax reform, which was implemented under the Black-Blue coalition has the effect that employees, in spite of a positive wage policy, are left with a lower net monthly income (example: a pay rise of 1€ has at best a net value of 52 Cent). Foglar emphasized that higher spending power was a necessary factor to boost economic growth. In this context, he presented the AK/ÖGB model for wage tax reduction, which had already been signed by 800,000 people. It is the aim of the trade union that this model will be implemented by the Austrian Parliament in 2015.
Multinationals continue to exploit national tax loopholes
David Begg commented that the Irish economy currently shows a strong growth of 5.7 %. In his opinion, the recession had not been the result of high national debt, but of undesirable developments in the real estate and banking sector. According to him, a monetary union without fiscal and banking union was not possible. An important factor would be a growing domestic demand. He also demands that new social risks should be secured, in particular with regard to precarious employment circumstances and education and training. Begg stated that multinationals not only did not want to pay taxes; they also wanted to monopolize the entire infrastructure. In his opinion, the EU had not calmed down the globalisation situation, but aggravated it.
However, some EU Member States (e.g. Ireland) see to it themselves that multinational concerns are able to minimize their tax burden via foreign subsidiaries entirely legally. According to OECD estimates, multinationals have globally squirreled away about 1,600 billion euros in tax oases or low tax areas. This could only have taken place by exploiting national loopholes and uncoordinated international tax laws.
Intensified tax policy developments
Heinz Zourek commented that a monetary union without fiscal union was hardly feasible. In recent years, the trend in the Member States to discuss certain tax policy matters had become increasingly more apparent, something which was regarded as unthinkable before. Recently, the European Semester has also been commenting on tax policy subjects, for example with regard to excessive labour taxation. Zourek pointed out that there had been an increasingly more intensive cooperation lately, also with regard to the agreement of the Ministers of Finance on automatic data exchange. This can be registered as an important upward trend.
The host Marlies Stubits (Permanent Representative of Austria to the OECD) was joined in the panel discussion by Erich Foglar (ÖGB President), David Begg (General Secretary of the Irish Congress of Trade Unions ICTU), Heinz Zourek (Director General on Taxation and Customs Union of the EU Commission) and Michael Förster (Senior Policy Adviser OECD). Förster presented some results from his work with regard to the development of income inequality in OECD countries. He pointed out that since the 1980ies the gap between rich and poor had been continuously widening. Due to the aftermath of the economic crisis and public spending cuts, inequality had risen again in recent years. It had to be pointed out specifically that in most OECD countries, including Austria, the poorest 10 % of all households showed a higher loss of income than the wealthiest 10 %.
Failed tax policy in Austria
Erich Foglar believes that the imbalance in Austria is among other also the result of a failed tax policy: The tax reform, which was implemented under the Black-Blue coalition has the effect that employees, in spite of a positive wage policy, are left with a lower net monthly income (example: a pay rise of 1€ has at best a net value of 52 Cent). Foglar emphasized that higher spending power was a necessary factor to boost economic growth. In this context, he presented the AK/ÖGB model for wage tax reduction, which had already been signed by 800,000 people. It is the aim of the trade union that this model will be implemented by the Austrian Parliament in 2015.
Multinationals continue to exploit national tax loopholes
David Begg commented that the Irish economy currently shows a strong growth of 5.7 %. In his opinion, the recession had not been the result of high national debt, but of undesirable developments in the real estate and banking sector. According to him, a monetary union without fiscal and banking union was not possible. An important factor would be a growing domestic demand. He also demands that new social risks should be secured, in particular with regard to precarious employment circumstances and education and training. Begg stated that multinationals not only did not want to pay taxes; they also wanted to monopolize the entire infrastructure. In his opinion, the EU had not calmed down the globalisation situation, but aggravated it.
However, some EU Member States (e.g. Ireland) see to it themselves that multinational concerns are able to minimize their tax burden via foreign subsidiaries entirely legally. According to OECD estimates, multinationals have globally squirreled away about 1,600 billion euros in tax oases or low tax areas. This could only have taken place by exploiting national loopholes and uncoordinated international tax laws.
Intensified tax policy developments
Heinz Zourek commented that a monetary union without fiscal union was hardly feasible. In recent years, the trend in the Member States to discuss certain tax policy matters had become increasingly more apparent, something which was regarded as unthinkable before. Recently, the European Semester has also been commenting on tax policy subjects, for example with regard to excessive labour taxation. Zourek pointed out that there had been an increasingly more intensive cooperation lately, also with regard to the agreement of the Ministers of Finance on automatic data exchange. This can be registered as an important upward trend.