More Liberal voices. A response to the EC public consultation on a ‘European Taxpayer’s Code’

Lithuanian Free Market Institute in partnership with F. A. Hayek Foundation (Slovakia), Civil Development Forum (FOR) (Poland), Institute of Economic and Social Studies (INESS) (Slovakia), Institute for Market Economics (IME) (Bulgaria), Centre for Economic and Market Analyses (CETA),  (Czech Republic)and the Friedrich Naumann Foundation for Freedom (Germany) contributed to the public consultation of European Commission on a ‘European Taxpayer’s Code’, which took place from 25.02.2013 to 17.05.2013.

Tax code

A ‘European Taxpayer’s Code’

Objective of the consultation

The aim of a European taxpayer’s code is to introduce measures to combat tax evasion and put forward a set of rules that taxpayers would commit to follow.

Response in brief

A European taxpayer’s code could be useful for the EU taxpayers if it ensured legal certainty, which is not always provided by the local tax codes (if at all). <…> the right to a high degree of predictability of tax law <…> would improve the tax system in the EU member states.

A European taxpayer’s code would immensely benefit the European taxpayers if it limited the length of an audit process. Introducing a binding limit on the length of an audit would lower the burden of tax administration.


 

The aim of a European taxpayer’s code is to introduce measures to combat tax evasion and put forward a set of rules that taxpayers would commit to follow. Taxpayers already face an obligation to pay taxes and reiterating this obligation in a separate tax code is unnecessary. These are not measures that should be included in a taxpayer’s code, since they will not produce any tangible benefit to the taxpayers. However, if such a code is to be passed, taxpayers would benefit from provisions ensuring legal certainty, such as the right to a high degree of predictability of tax law amendments; of limiting the length of an audit process; service standards; impartiality and independence; responsiveness of the local tax administrators.

A European taxpayer’s code could be useful for the EU taxpayers if it ensured legal certainty, which is not always provided by the local tax codes (if at all). For example, the right to a high degree of predictability of tax law amendments is not necessarily provided in all the EU member states. Including this right in the European taxpayer’s code and introducing a binding limit when tax law amendments can come into effects, such as 6 months after they were passed, would improve the tax system in the EU member states.

A European taxpayer’s code would immensely benefit the European taxpayers if it limited the length of an audit process. In some cases, the audit process performed at the taxpayer’s office is limited, but the length of the process performed at the tax administrator’s office is unlimited. This may result in protracted audit processes, taking up to 3 years to complete. Introducing a binding limit on the length of an audit would lower the burden of tax administration.

Service standards, impartiality and independence are other areas where a European taxpayer’s code could be helpful for the taxpayers.

Responsiveness of the local tax administrators could also be ensured by a European taxpayer’s code, whereby binding limits could be introduced ensuring that the taxpayers’ request for clarification is provided in a reasonable time.