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EU summit calls time on banking secrecy

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(Globalpost/GlobalPost)

European leaders on Wednesday targeted a year-end deadline to undo banking secrecy, ultimately hoping to recoup a trillion euros in lost tax each year to help beat recession and unemployment.

A four-hour summit also touching on energy policy and Syria saw the European Union agree to introduce "before the year ends" a system for the automatic exchange of limited information between countries on personal savings accounts.

Leaders also agreed to revisit rules governing registration for multinational companies as well as anti money-laundering measures and cooperation on sales tax, or VAT.

"Tax evasion is a serious crime, one which, thanks to protracted legal proceedings and trifling penalties, can be committed virtually with impunity," European Parliament head Martin Schulz told the summit.

EU President Herman Van Rompuy said there was momentum for a tax crackdown "because of the economic crisis."

The plans however are still much more limited than those brokered by the United States with international partners in 2010.

But EU rules first agreed in 2008 are finally to be adopted "before the end of the year," according to the final summit conclusions.

In a blow to Luxembourg and Austria, French President Francois Hollande said the savings account directive would be adopted regardless of progress on parallel negotiations with non-EU tax havens Switzerland, Andorra, Liechtenstein, Monaco and San Marino.

Luxembourg and Austria have long cherished banking secrecy and had demanded that similar deals be concluded with those five rivals before lifting their longstanding objections to implementing the data exchange regime.

Luxembourg Prime Minister Jean-Claude Juncker said the EU agreements with neighbouring fiscal paradises would need to "cover as wide a range of financial products as possible," although he added that he would be satisfied with comparable, and not necessarily identical rules to those within the EU.

But it remained unclear exactly how far Juncker was willing to go, and how quickly ahead of his own self-imposed January 2015 deadline.

-- Doing 'the right thing' --

Oxfam estimates that more than $12 trillion (9.5 trillion euros) is hidden in EU-anchored tax havens -- with the UK and its dependencies alone, from Guernsey to Grand Cayman, accounting for more than half.

Oxfam's Catherine Olier said that while it was "encouraging" that leaders were pushing for greater transparency, "they failed to agree to set up a public tax havens blacklist and to impose sanctions against tax havens and those using them."

European Commission head Jose Manuel Barroso admitted that "quite frankly, I would prefer (the outcome) to be more precise."

In London meanwhile, as the summit was taking place, Google executive chairman Eric Schmidt defended the Internet giant's readiness to exploit competition between governments for investment, saying his company was trying to do the "right thing" despite paying just £6 million in corporation tax on sales in Britain worth £3.2 billion in 2011.

Schmidt's intervention followed US lawmakers' grilling of Apple chief executive Tim Cook for running "sham" subsidiaries as part of "convoluted" strategies to shift profits offshore.

Ireland is frequently a beneficiary with its low corporation tax, but Prime Minister Enda Kenny denied "special" deals were available for any company.

Belgian Greens EU lawmaker Philippe Lamberts said the summit's tax goals amounted to little more than "gesticulation," saying "there is clearly no political will" to undermine nationally-controlled tax-setting powers.

The one-day summit also took up reform of the energy market as the struggling bloc faces up the new challenge posed by the US shale gas boom which has slashed prices there, undercutting the EU's competitive edge.

The meeting agreed to a series of reforms in the hope of delivering a more efficient market with lower prices and opened the way to countries to take the shale gas option if they wanted to.

Britain, Hungary, Poland, Romania and Spain favour shale gas development but others, including France, are opposed, citing environmental objections.

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http://www.globalpost.com/dispatch/news/afp/130522/eu-summit-calls-time-banking-secrecy-0