By Judith Ugwumadu | 8 April 2014

European Union member states are taking too long to overhaul their tax policies and reforms will not be sustainable, the commissioner for taxation and customs union, audit and anti-fraud has warned in his last session before parliament.

Speaking to the committee on economic and monetary affairs in Brussels yesterday, Algirdas Šemeta wrapped up progress on EU tax policy over the course of his five-year mandate. 

Šemeta said advancements had been made to encourage member states to pay particular attention to designing growth-friendly tax policies. These included a shift away from taxing labour towards taxes that were less detrimental to growth, like consumption, environment and property. 

But he said tax reforms could only be growth-friendly if they worked and added that they should not be undermined by a lack of policy coordination. 

‘Coordinated action at the EU level should, therefore, continue to support member states in eliminating mismatches and removing tax obstacles to the single market,’ said the commissioner.

‘In this context, I believe that stronger links between the European parliament and national parliaments in taxation could deliver great progress. This committee could make a major impact be seeking deeper cooperation and alliances with national legislators in the area of taxation.’

EU tax policy had risen high up the political agenda during his mandate, he noted, but said substantial progress still needed to be made. 

‘These progresses have often been too slow. The reality of our unanimity based decision-making process is that the convoy currently moves at the pace of the slowest ship,’ Šemeta said.

‘We have to ask whether that is sustainable in the long term, as our economic and monetary integration becomes ever deeper.’

He said the next parliament would continue to have a crucial role in pushing tax issues forward. 

Meanwhile, during his final speech Šemeta stated that the issue of tax evasion was still far from over.  

‘If we look back [five] years, we will remember that this issue was barley on the political radar. Gathering serious interest or momentum for measures to tackle tax fraud was nearly impossible,’ he said. 

Šemeta said he was thankful that the fight against tax evasion was changing, but added that ‘it [could] not be won overnight’. 

Political momentum would have to be sustained and commitments would have to turn into actions, he told the committee, urging them to single out the Financial Transaction Tax, ‘as the epitome of fair tax.’

He said the levy on monetary transactions would be ‘remarkable for triggering enhanced cooperation in the field of taxation’.

‘Fairness is central to the fight against tax evasion. And this principle has guided much of our work during this mandate.’