Over the last 10 years the EU has confronted expanded inequalities across a range of areas from gender, to generational, wealth, mobility and opportunity. One underlying factor common to these expanded inequalities is the contribution of deficiencies in fiscal systems. Income inequality can be traced to ‘effectively’ regressive tax systems that tax labor and consumption more than capital. A major reason for this is the international mobility of capital paired with financial secrecy in tax havens. Conditioned by the twin financial and fiscal crisis the EU and Member States have not been slow to react with accelerated policy innovations at the national, regional and international levels. These innovations constitute a sea change in tax policy and the EU fiscal regime. A host of novel regulatory instruments are now hitting the ground. The ‘Combating Fiscal Fraud and Empowering Regulators’ (COFFERS) project provides a novel framework to contribute to a better understanding of the current state of affairs, gauge the traction of regulatory innovation, identify the trajectory of system change and provide remedies for deficiencies in the EU fiscal regime going forward. Identifying deficiencies and opportunities for upgrading in tax law, tax policy development, tax administration and enforcement at the EU level and across Member States COFFERS builds a platform for a more inclusive and united Europe where inequalities are decreasing.
Overall, the project saw Automatic Exchange of Information as a successful policy reform. Nevertheless important loopholes have been identified: the US does not participate with AEI. Asymmetric, non-reciprocal regulations between the US and Europe and the many entrance points with different tax regulations in Europe are seen as major hindrances for AEI to function. In addition, loopholes within Europe, such as golden visas and passports are important hindrances which have to be repaired. BEPS, with Country by Country Reporting as one important issue, have proven less successful. The EU managed well to reduce tax evasion of individuals, but less so to combat aggressive tax planning of companies. An important loophole is the lack of transparent registers and reporting requirements which can be circumvented too easily. Legal Entity Identifiers are seen skeptical, because the quality standards are difficult to control. Corporate Forms that have been analyzed in detail were digital platforms such as the taxi platform Uber and freeports. The rise in freeports, in particular in countries like Switzerland, offer a new unregulated possibility to park tax evasion values. Regarding the role of tax experts, a large survey done by COFFERS revealed that tax experts act differently depending on their environment but also their personality and morale. A study of the Big Four revealed that they have changed the financial architecture worldwide.
