Tax and energy to dominate EU summit in Brussels

Tax and energy to dominate EU summit in Brussels

EU leaders are gathering in Brussels for a summit to tackle tax evasion and improve Europe's energy market.

After sharp divisions over the EU budget there may be more consensus on these issues, seen as vital in restoring Europe's competitiveness.

Tax evasion costs EU states 1tn euros ($1.3tn; £0.85tn) a year - more than was spent on healthcare in 2008.

A European Parliament resolution calls on the EU to halve that figure by 2020, by curbing tax loopholes and havens.

The lead author of that resolution, Slovenian socialist MEP Mojca Kleva Kekus, called the current scope for cross-border tax fraud "scandalous".

"Unilateral national measures will not suffice to defeat it," she told MEPs on Tuesday, in a major debate on tax evasion.

The MEPs called for a joint EU blacklist of tax havens. Earlier, UK Prime Minister David Cameron had urged low-tax British overseas territories to sign up to international tax treaties.

The European Commission is also pressing for automatic exchanges of people's earnings data between tax authorities. Commission President Jose Manuel Barroso says the EU should aim to introduce such exchanges on 1 January 2015.

Next month the G8 industrialised countries will discuss strengthening global action against tax evasion and avoidance, so this one-day Brussels summit is aimed at establishing a joint EU position.

Energy co-operation

The other main theme is energy policy - especially the need to improve Europe's energy infrastructure, develop renewables such as solar and wind power and remove barriers to competition. Much of Eastern Europe relies on Russia for gas - and in the past pricing disputes have led to supply shortages in mid-winter.

The Commission is urging EU governments to enact energy legislation that was agreed in 2011, warning that on current trends imports of gas will rise to 80% of the gas consumed in the EU by 2035.

The EU already imports 406bn euros' worth of oil, gas and coal annually - 3.2% of total EU economic output (GDP).

The fragmentation of Europe's energy market makes it difficult to woo long-term investors willing to commit to multi-billion-euro infrastructure projects. The energy mix varies greatly across Europe, from nuclear-dominated France to coal-dependent Poland.

But a key goal is to connect Europe's isolated "energy islands" - former Soviet bloc countries like Estonia and Bulgaria - to European grids and storage facilities.

The distortions in Europe's energy market mean that Bulgarians - the EU's poorest citizens - pay more for their electricity than consumers in the UK or Germany.

In the global economy the energy blockages threaten to put Europe at a serious disadvantage. The gas price index for EU households rose by 45% in 2005-12, compared with 3% in the US, while the figures for electricity were 22% and 8% respectively, the Commission says.

Transparency push
As host of the G8, Mr Cameron has put the tax issue high on the agenda.

The EU has already agreed to strengthen savings tax agreements with European countries widely regarded as tax havens - Switzerland, Liechtenstein, Monaco, Andorra and San Marino.

EU members Austria and Luxembourg are also low-tax jurisdictions famous for banking secrecy. They are under pressure to join the tax transparency drive, and both countries signalled a willingness on Tuesday to exchange information on foreign depositors.

In his summit invitation letter, European Council President Herman Van Rompuy said progress on tax collection and affordable energy was essential to make budget austerity more acceptable to voters.

There has been widespread anger from ordinary taxpayers over the sophisticated tax avoidance practised by some big corporations in Europe.

Google, Starbucks and Amazon are among the companies that have faced tough questioning over their tax affairs recently.

And this week Apple came under fire in the US Congress over its low tax payments.