The latest changes in the French tax evasion policy and its influence
4. Works in progress
4.1. Punitive approach
To realise the previous announcements of combating the tax evasion, the French government initiated the accelerated procedure of the adop-tion of the acts that will allow the intensificaadop-tion of the fight against tax evasion. On the 24th of April 2013 two projects of law were de-posed: the bill on the fight against tax evasion and the great economic and financial delinquency (projet du 22 avril 2013 de la loi relatif à la lutte contre la fraude fiscale et la grande déliquance économique et financière JUSX1310649L) and the organic bill on the Financial Prose-cutor of the Republic (projet du 22 avril 2013 de la loi organique re-latif au procureur de la République financier, JUS X1310899L). It is planned that these provisions will come into force in the autumn of 2014.
The aim of the bill on the fight against tax evasion and the great economic and financial delinquency is:
– to allow the organisations fighting against corruption to become the civil party and to eliminate the monopoly of prosecution of public ministry for corruption involving a public official of a foreign state or an international organisation (art. 1),
– to extend the jurisdiction of the national brigade of the preven-tion of tax delinquency (Brigade napreven-tionale de la répression de
la délinquance fiscale) to the complex tax evasion crimes, the punishment is also reinforced (art. 2 and 3),
– to make possible the sentencing for complementary general confiscation of assets of corporations convicted of money laun-dering (art. 4),
– to improve the effectiveness of provisions relating to the inter-national assistance for the seizure of criminal assets (art. 9), – to allow the tax administration to exploit the information that it
receives, regardless of its origin (art. 10),
– to extend the competencies of specialized inter-regional courts (JIRS) in economic and financial matters and to remove special-ized regional courts (JRS) (art. 12 and 13),
– to create the Financial Prosecutor of the Republic which shall have exclusive jurisdiction for the prosecution, investigation and trial of market abuse (art. 14 to 16 and art. 19). The provi-sions relating to the Financial Prosecutor of the Republic will be supplemented by the above-mentioned bill of the organic law.
Before all of these provisions will enter into force and enable a more effective fight against tax evasion, the French Budget Minister, Bernard Cazeneuve, has issued the 21st July 2013 the circular concern-ing the treatment of corrective tax declaration of taxpayers holdconcern-ing assets abroad (circulaire du 21 juin 2013 du Ministré délégué chargé du Budget sur le traitement the declarations rectificatives des con-tribuab les détenant des avoirs à l’étranger) that should encourage the taxpayers to reveal their revenues dissimulated in their foreign bank accounts. By this circular, the government calls the taxpayers holding abroad undeclared assets to make its situation legal as soon as possible in respect of common law, of the principles of transparency and fair-ness, which are the guarantors of the equality of citizens. The rate of penalty for wilful failure will be 30% for so-called “active” fraudsters, and 15% for the “passive” fraudsters (who, for e.g. inherited unde-clared assets) instead of a rate of 40% normally applicable when the information of assets held abroad by the taxpayers are obtained by the administration itself. The circular has not introduced any kind of am-nesty, so the taxpayers must pay the full amount of taxes evaded and the corresponding penalties and fines.
4.2. Preventive approach
It is worth noting that in addition to typically punitive approaches, it is possible (and desirable) to use complementarily a different solution based on the prevention. As Michel Bouvier [2010, pp. 12] explains for this purpose it is necessary to resign, at least partially, from unilat-eral determination of rules by public authorities and to establish rights and obligations of the tax administration and taxpayers together in the form of so-called preventive fiscal agreements. Such a solution has already been used in some countries, including the Anglo-Saxon ones.
These agreements – which may take the form of the prior agreements on the transfer of prices – may be coherent with the concept of man-agement of tax administrations but also with the strategic manman-agement of the enterprises. This concept can help to develop a new civic fiscal attitude. In consequence, a new form of fiscal governance is being created that consists of the accountability of both the taxpayers and the tax administration to establish the rights and obligations of both parties. This concept is also aimed at developing a new fiscal citizen-ship which consists of recognition and acceptance of the validity of the tax by the taxpayer in order that he voluntarily fulfils his tax obli-gations. The preventive fiscal agreements provide fiscal security for both sides – the taxpayer and the tax administration – because they fit in the preventive and not repressive concept of reduction of tax evasion.
This approach represents a new form of public governance on the enterprise management model which aims – on one hand – at a reduc-tion of public expenditure and – on the other hand – an increase of pub-lic income. The preventive fiscal agreements fit in the process of le-gitimacy of taxes but also at the same time gain lele-gitimacy themselves by providing the legal certitude for the taxpayer and the tax admini-stration and cost reduction for both the tax adminiadmini-stration and the tax-payer [Bouvier, 2010, pp. 12].
5. Conclusions
Even if the problem of tax evasion and fiscal paradises is not new, however the financial and economic crisis and serious problems of the majority of countries of all over the world related to the lack of
sus-tainability of public finances and excessive levels of public debt caused that the problem of tax evasion and the tax heavens had be-come the centre of attention. On one hand, the conviction that the tax administration, sooner or later, will get to know about all revenues of the taxpayer surely would efficiently discourage them from the eva-sion of tax. However, the effective combat with the fiscal evaeva-sion requires the international co-operation between all countries in order to create a transparent system of information necessary to tax what should be taxed. Obviously, countries that earn on the existence of being a tax heaven are not interested in the creation of such systems because they will lose the important part of the revenues coming from banks located in its territories. So the strong determination of interna-tional community is necessary to effectively combat the evasion of tax. On the other hand, the application of the preventive methods – next to strictly the punitive ones – would aid to decrease the scope of the phenomenon of the tax evasion and to develop the new intellectual attitude consisting of the recognition of the legitimacy of tax burdens.
Regardless of the approach, there is no doubt that the phenomenon of tax evasion should be significantly reduced because of its detrimental influence on public finances, but also in the sense of the social justice.
The paper was prepared in the frame of the project financed by the resources of the Polish National Science Centre granted by decision no DEC-2012/05/N/HS5/02527.
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