The European Commission has engaged Reckon LLP, the London based economic consultancy group, to assess the revenue lost through shortcomings in the EU's VAT system.
The Commission has now published this report and the full text is available at http://ec.europa.eu/taxation_customs/resources/documents/taxation/tax_cooperation/combating_tax_fraud/reckon_report_sep2009.pdf .
The findings cover 24 Member States (Cyprus, Bulgaria and Romania are not included) and conclude firm that the total VAT gap for these countries for 2006 was €107 billion or 12% of receipts.
This shortfall is a consequence of fraud in the system, tax unpaid because of trader insolvency but also includes the cost to tax administrations of legitimate tax avoidance measures. Although confirming the seriousness of the shortfall, the report does not seek to break it down over these different headings.
The full report should be read by anybody who is worried about the waste of public resources outlined here. It can only be hoped that the figures here become a wake-up call for politicians.
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