Re: Tax avoidence/evasion
 

Portuguese promotional literature: Europe's best-kept secret: Why Portugal should be your top tax choice

It seems even Portugal is getting into the tax competition game as an anti-austerity tactic

No doubt that's "unfair" to the high-tax Eurocracy. IIRC, "Anti-Competitive" is the term they oft use to describe the same "unfairness" exhibited by Ireland, Luxembourg, and others.

Re: Tax avoidence/evasion
 

What of course what the headlines do not say is that the tax benefits for investing E500,000 for one scheme or becoming a tax resident on another scheme have a limited life.
They do not say that only income which can be exported tax free qualifies.
If your current tax regime does not allow certain sources of income to be paid free of tax then you cannot get it back.
Estate agents are using the " headline " as a means of promoting property sales but as ever the devil is in the detail.

Again the headline does not tell you is that once the qualifying period is over you will have to pay Portuguese tax rates which are higher than many other EU countries.

I first came across this scheme over 3 years ago when a client who happened to work for the EU in Brussels was looking for somewhere to take his very nice tax free pension.
He spent over E300,000 on a property and is now PT tax resident under the scheme.
In a few years no doubt he will be looking to re locate again .
I believe that Sweden change its pension rules to reduce the advantage for its citizens.
Just as we are seeing tax competition from countries in need of investment which will have a positive effect on a depressed economy so we will see an equal and opposite reaction from those tax regimes who see their tax take declining.
What these schemes have now revealed is the huge amount of " hot dirty " money much of it Chinese and the large levels of corruption that has occcured.
Senior government officials in Portugal are under investigation for receiving bribes to facilitate so called " golden visas ".
If we accept the principle of tax competition surely there is a difference between a regime that sets out to re build its economy and infrastructure as in Portugal where its aim is to invigorate the housing market and those which are used by companies to avoid paying tax where they are economically active.

Re: Tax avoidence/evasion
 

That's a relief.

I was quite distraught at the the thought that someone might be permitted to unfairly pay lower taxes than I. After all, according to those who have the responsibility of defining what's best for the average taxpayer, high tax is "fairer" than low tax.

Re: Tax avoidence/evasion
 

We have two streams of debate here .
1) Individual taxation and the ability of some to take short term advantage by moving their economic activity to a different tax regime.
2 ) Corporate taxation where global players use low tax regimes to avoid paying their fare share in the countries where they are economically active.

No one can say that the activities of Amazon, Apple, Google etc etc can be compared to an average Swedish or French pensioner who risks much if not all by moving to a foreign country.

Re: Tax avoidence/evasion
 

Two streams of debate? Perhaps, but I'd argue the two streams are;

"Tax avoidance/evasion - good or bad?"

and

"Does tax policy systematically facilitate and encourage it?".

I'd argue the latter: EU tax policy is systematically tilted in disfavour of the average taxpayer. There are plenty of words to the contrary (no doubt to satisfy the few non-apathetic voters who may object at the polls)...

...but the status quo is to favour the elite at the expense of the average taxpayer. This is the very basis of tax policy throughout the EU, and always has been (and without systematic tax policy overhaul, shall remain).

Europe Eases Corporate Tax Dodge as Worker Burdens Rise

The fact is, that if all countries were subjected to the highest common denominator of European economic ideologies; e.g., high tax on the working class, low tax on business and the elite, protectionist trade and labour policies, immunity for the ruling class, etc., then I the entire world would economically look very much like Europe, and demonstrably, that's not a particularly desirable (or responsible) position to aspire to.

Raising corporate and wealth taxes (and scaring business and wealth away to tax-friendlier jurisdictions - as it demonstrably does) without providing equal relief for average taxpayers, cannot possibly render any desirable result for the overall economy.

The only real solution is to reverse the tax inequality Europe demonstrates. Higher corporate and capital gains taxes, and lower taxation on the average taxpayer. In fact, there's a lot less competition in that model, and frankly, those who operate on that model are demonstrably quite a bit more successful and sustainable.

Unfortunately, avoiding a "greater-than-50%-tax-burdened-GDP" would require a fundamental overhaul of the European tax system from the ground up, and obviously, there's little political will from those who currently enjoy the power to grant themselves (and their peers) immunity from it.

There won't be any massive overhaul anytime soon, and even if the EU gets its way, there's not much to be optimistic about. It will only render more burden on everyone, and further stagnation of the economy.

Re: Tax avoidence/evasion
 

Greater than 50%. Where do you get that figure from? I don't know but I cannot believe it is above 50%.

Re: Tax avoidence/evasion
 

Current average tax burden across the Eurozone hovers around 40% of GDP, which is pretty much the highest in the world.

http://danieljmitchell.files.wordpre...-total-tax.jpg

European tax policy
Taxation Trends - European Union

OECD benchmark PPPs

If taxation is increased through proposed "tax harmonisation", presumably raising corporate and capital gains taxation by eliminating so-called intra-European tax "havens" (collective wisdom being that an additional €1 trillion in potential tax revenue will result), without reducing individual tax burdens - including both progressive (e.g., payroll and income tax) and regressive (VAT), then that number will easily increase to well above 50%, which will make the EU (and especially the Eurozone) the single most taxed economy in the world by an even wider margin.

In fact, it only would render the European economy more tax-driven than trade-driven. The question is, when tax collection becomes more of an economic driver than trade, then where does all the tax revenue that the economy depends on come from?

Re: Tax avoidence/evasion
 

I misunderstood your post. I thought you were saying the current tax burden was greater than 50%.

Another thing I do not understand is how the figures work. For example if a government raises tax at a say 40% tax to GDP but returns say 20% of that back by way of pensions, benefits, grants etc. is that taken in to account when arriving at the % published?
If it's not taken into account then they may skew the figures as another country with the same % may pay lower pensions, benefits etc.
I suppose it's like a rebate and if that's the case the statistics cannot be relied upon.

PS I fully accept I may be "talking" gibberish.

Re: Tax avoidence/evasion
 

No you are not talkng gibberish if the figures in the chart are the " gross tax " take by Government rather than the net after payments back into the economy of Pensions, benefits ,health and education.
Even if you remove indirect payments , health and Education etc the figures quoted could be wildly inaccurate.

I do agree with AM though that if the EU imposed tax harmonisation or even a much higher min for corporate taxation the additional tax revenue is unlikely to result in lower tax for working individuals.
The best we could look forward to is a reduction in deficits.

Re: Tax avoidence/evasion
 

My life is complete. I've got you and Ami to agree on something!;)

Re: Tax avoidence/evasion
 

No, you make a valid point.

Surely, you can compare this or that in different ways, and come up with a different set of figures, but the fact remains that we have, and continue to be, moving in the direction of a tax-based economy under the sole control of a large, paternal government, which has repeatedly demonstrated it's favouritism for tax revenue over economic growth, and that says a lot about the European economy at present.

My view is that if economic growth benefiting the average citizen were the real intent (e.g., "government as a public service"), the debate would necessarily be all about higher (progressive) tax on business and capital gains, and tax relief for individual taxpayers. Demonstrably the absolute reverse of what we have at present, yet by European standards, is politically suicidal to even suggest.

For some indication of that, you may notice that amongst any European leadership, tax relief of any kind is conspicuously absent from any political debate covering tax avoidance/evasion or any other economic discussion. It's a completely foreign concept (literally).

Yet tax relief has historically proven to stimulate economic growth and ultimately, actually increase tax revenues. Just look at the so-called "tax havens". They have precious few economic problems.

In the European political system, Tax = Power. Without it, they fear losing control of the economy (and the population).

Not surprising, the German word for tax is "steuer", which also happens to be a German word for "control".

Re: Tax avoidence/evasion
 

It's probably also worth pointing out in this context, that the American revolutionary war could be equally characterised as a "British civil war" with two primary grievances: Religious freedom and http://en.wikipedia.org/wiki/No_taxation_without_representation.

To me, that speaks volumes about why the yanks are so averse to big government control and taxation. And in the end, that ideology obviously hasn't served them too badly.

Re: Tax avoidence/evasion
 

I did chuckle at this as it displays yet again American ignorance of things outside of their own world.
He had obviously never heard of Magna Carta or the real Civil war fought between an autocratic monarch who wanted freedom to raise tax and Parliament who wanted what was at that time a form of democracy.
The freedoms that the colonists had, and wanted to maintain were won on the battlefields of 17th century Great Britain.
Writers like Thomas Pain whose views form part of the US consitution were English.
So you could and should say that the American war of independence should be renamed and called the second English civil war.

Re: Tax avoidence/evasion
 

What are you on about now?

Re: Tax avoidence/evasion
 

Your post with its links to some American with strange views of History.
But that should not come as a surprise to anyone ( American views that is ).