Where a tax authority fails to collect taxes due, who holds them to account? The answer, at a domestic level, will depend on the jurisdiction but may be the courts, Parliament, the media, specialist committees and so on.
But there is a case for supranational monitoring of tax collection, particularly in the case of the EU, by virtue of the negative spillover effects caused by lax tax administration, as well as the budgetary and macroeconomic consequences.
In a forthcoming paper in the Modern Law Review, I suggest that Member States owe an account of the performance of their tax authorities to the Commission. In order for this to be operationalised, I suggest that we should use an accountability framework which harnesses expertise, rather than being antitethical to it – Onora O’Neill’s model of ‘intelligent accountability’. Using tax rulings as a proxy for determining how tax authorities act in relation to large taxpayers, the paper proposes that tax rulings provided to large taxpayers should be published (in an anonymised format) and assessed by the expert Code of Conduct Group (which monitors Member State compliance with the Code of Conduct for Business Taxation), Member States through peer-review and the public. Appreciating that Member States will have their own mechanisms for holding tax authorities to account, the paper goes on to propose separately that these systems can be harnessed so that an account of the performance of tax authorities can be transmitted to the Commission, which (with the assistance of an expert ‘Tax Administration Group’ – to be established) can then decide whether any changes should be recommended, which would be monitored in the European Semester.
Both the Code of Conduct for Business Taxation and the European Semester are examples of the ‘open method of coordination’ – a framework for cooperation between EU Member States. So the paper then brings together the OMC, a theory of accountability, and makes a case for monitoring, and suggests how to monitor, tax authorities at an EU level.
The article is open access and available here.
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