S&Ds: The fight against customs fraud is the first crucial battle to guarantee funds for the EU budget

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Euro & Finance

Press release

The protection of EU financial interests (PIF) is essential to guarantee the good management of public money and serve the interests of EU citizens. In this year’s report drafted by Gilles Pargneaux, two major steps forward were welcomed: the adoption of the PIF directive and the creation of the European public prosecutor’s office (EPPO). However, it is regrettable that not all member states decided to take part in the latter. Although there has been a constant diminution of irregularities across the years, many remain within big indirect spending areas such as cohesion, agriculture and fisheries. It is to be expected that simplification can help to reduce these irregularities further.
 
S&D rapporteur on protection of EU’s financial interests, Gilles Pargneaux, said:
 
“Every single euro that is not paid into the customs account is a huge loss for citizens, for the defrauded member state and for the whole of Europe. In such difficult times where the pressure of austerity is still blowing on the public expenditure capabilities, we cannot allow ourselves the loss of almost 2 billion euro (1.987 billion euro) to the EU budget, as in the case of customs fraud in the UK denounced by the OLAF investigation in early 2017. This case, linked to textiles and shoes imported from China through the UK in the period 2013-2016, could be one of the biggest fraud rings uncovered by OLAF in its history. As a means of comparison, in 2016 OLAF recommended member states to recover ‘only’ 631 million euros, from possible frauds from 272 concluded investigations.
 
“Tobacco smuggling is another of the sources of vast EU budgetary losses, and a major cause of concern for the health of EU citizens.
 
“These funds must be recovered and we welcome the infringement procedure initiated by the European Commission. We urgently need updated measures to avoid such fraud taking place in the future, such as greater customs harmonisation and the improvement of information flow between tax and customs authorities on imports. Concerning tobacco, the PMI, BAT, JTI, and ITL agreements should not be renewed.
 
“The current discussion on the future European budget will be a tough battle for resources. Recovering the funds defrauded from citizens’ pockets would represent a first and very crucial victory for the EU.”
 
S&D’s budgetary control committee co-ordinator, Inés Ayala Sender MEP, added:
 
“We can accept opening the dialogue on the downsized Commission proposal based on the argument of the impact of Brexit, but we cannot accept having the European Commission and members states telling us there is no money left for the next MFF, when no real mobilisation has been triggered to recover the loss of such massive amounts; (in 2015, circa 160.0 billion were lost due to the EU’s VAT gap and fraud). This is not only extremely frustrating; this is not an option for us.
 
The so-called Carousel fraud and tobacco smuggling, as well as the customs fraud, are some of the areas where president Juncker and his Commission must finally act to eliminate fraud. We must widen the set of EU own resources; in the meantime we must preserve and strongly defend VAT against fraud as the major resource the European Union relies on.
 
The fight against tax fraud and tax avoidance goes hand in hand with a concrete and effective protection of whistle-blowers and investigative journalism. In this regard, thanks to the crucial support and initiative of the S&D Group, we achieved a decent level of protection for all actors who remain crucial in detecting fraud.”