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“Governments should chase VAT loss not the poor” - Martina Anderson MEP

21 October, 2013 - by Martina Anderson MEP

Commenting on an EU Report that estimated €193 billion in VAT revenues (1.5% of GDP) was lost due to non-compliance or non-collection in 2011 across member States, Sinn Féin MEP Martina Anderson said it would serve governments better to focus more on collecting their share of VAT lost than on cutting the much needed benefits of the poor.

Martina Anderson said:

“According to a new study on the VAT Gap in Member States, an estimated €193 billion in VAT revenue (1.5% of GDP) was lost due to non-compliance or non-collection in 2011. The study was funded by the European Commission as part of its work to reform the VAT system in Europe, as well as its wider campaign to clamp down on tax evasion.

“It sets out detailed data on the gap between the amount of VAT due and the amount actually collected in 26 Member States between 2000 and 2011.

"While Sinn Féin has always considered VAT to be a regressive tax, hitting the poor hardest, the fact that billions of Euro paid by citizens is lost, due to non-compliance or non-collection amounts to gross negligence on behalf of government.

“While governments can bring in all sorts of oppressive legislation to combat alleged and mostly exaggerated welfare fraud they are doing little to ensure that VAT paid by citizens to the tune of billions is collected and the revenue returned to the taxpayer through benefits and services.

“The impact that such sums could have in augmenting public finances is tremendous. A multi-faceted approach is required to close the gap between VAT projected and what is actually collected. First, a tougher stance against evasion and stronger enforcement at member State level, are essential. Secondly, the simpler the system, the easier it is for business to comply with the rules. And lastly, the State needs to reform and overhaul its tax collection systems in order to ensure compliance and deter evasion and avoidance.

“Government should also review existing exemptions and reductions with a view to enable them to avoid future increased rates or even allow for reductions in the standard VAT rates.”

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