During a public hearing hosted by the European Parliament’s subcommittee on tax matters (FISC) on the work of national tax authorities, former Prime Minister Alfred Sant cast doubt about whether the VAT gap (the difference between how much the Government is supposed to collect in his coffers from the VAT tax and how much it is actually being collected) is being estimated correctly and whether it does show a true picture on how big the gap is in actual fact. “I have the suspicion that it is much bigger than we want to believe. The measures that the European Commission is advancing rely too much on macro economic data and not so much on granular microdata”, he claimed. Alfred Sant is a member of the FISC subcommitte that was set up in 2020.
The Labour MEP emphasized that there are personnel problems in tax collection systems since they are understaffed and their employees have relatively low wages. That is bound to have a knock on effect even in terms of efforts undertaken to measure the VAT gap, he claimed, noting that a solution to this problem goes beyond introducing new legislation.
FISC was set up to assist the ECON Committee on tax-related matters and particularly the fight against tax fraud and tax evasion among others. The topics raised revolved around how to support tax authorities, foster its competitiveness, and protect the financial and economic interests of the Union. The hearing was attended by Ms Helena Alves Borges - Director-General of the Portuguese Tax and Customs Authority, Ms Ana Carmina Gamboa - Vice President of the Union of Finance Personnel in Europe, Mr Levan Kakava - President of the Intra-European Organisation of Tax Administrations, and Ms Zita Spranginiene - Chairwoman of the Lithuanian State Tax Inspectorate Employee's Trade Union.
Alfred Sant asked the panellists whether we should accept the figures given about the reduction of the VAT gap and whether they are confident that the VAT gap is really being reduced and if this is being reduced more in the products side rather than the services side.
In her reply, Ms Alves Borges claimed that in Portugal they have a cross reading of the macro and micro data in order to check what is changing in terms of the level of VAT collection and tax gap. She added that with concrete data they will be able to change the behaviour of economic operators.
On other hand, Ms Spranginiene said that in Lithuania they are close to complete the smarter tax administration system which helps the tax administrators to work more quickly and with more compliance.