VILNIUS, Lithuania (AP) — European Union finance ministers discussed ways to strengthen the bloc’s fight against tax fraud on Saturday and sought to downplay concerns over disagreements on crucial banking sector reforms.
EU officials say tax fraud and firms’ aggressive cross-border tax avoidance schemes cost the 28-nation bloc’s governments an estimated 1 trillion euros ($1.3 trillion) a year, which could provide precious new revenues at a time of sluggish growth and belt-tightening across Europe.
The finance ministers also discussed the issue with OECD chief Angel Gurria, following up on plans to increase taxation of multinational companies announced earlier this month at a meeting of the world’s 20 leading economies.
However, the ministers’ second day of talks was overshadowed by a rift over the completion of the bloc’s planned banking union that emerged Friday.
“So far there have been cannon shots going back and forth, but there hasn’t actually been a debate on how it could be solved,” Dutch Finance Minister Jeroen Dijsselbloem said.
Dijsselbloem, who also chairs the meetings of finance ministers from the 17-nation eurozone, said there will be “interesting debates over the next couple of months” but he voiced confidence that a compromise will be reached by December.
Failure to agree could delay the project by more than a year because of upcoming elections to the European Parliament in May and the departure next fall of the current EU Commission, the bloc’s executive arm.
The dispute over how to set up a single body to restructure or unwind bust banks across Europe saw a German-led group of countries firmly pitted against southern European nations, the European Central Bank and the EU Commission, in an argument over the legal basis for such an authority.
Commissioner Michel Barnier, in charge of financial services, insisted that contentious discussions in an early phase were normal. The goal is to better protect savers and shield taxpayers from having to fund further bailouts, he said. “So this takes time, it doesn’t fall out of the sky,” he said.
The euro countries have already agreed to set up a centralized bank oversight to be anchored with the ECB due to take effect next year.
Setting up the next step to deal with failed banks is seen as crucial to completing the banking union, which analysts bill as Europe’s most important initiative in turning the tide on the bloc’s three-year-old debt crisis.
The banking union’s goal is to make the supervision and rescue of banks the job of European institutions rather than leaving weaker member states to fend for themselves.
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