Sunday, January 29, 2012

The United States of Europe

When now the market and media hystery around the Euro is fading away it is getting clear that half-pregnant is not a happy state. More integration is needed to reach the splendid potential of a true single market - the largest in the world - is needed.

It is now very clear that no national politicians are allowed to borrow money (in the citizens' childrens' name) at a rate that not only destroys their own economy - but also endangers the stability of other European countries (be they in the Eurozone or not). Most of this hectic borrowing has furthermore led to overconsumption (surely bad news for the environment) - not investments for the future or dismantling of expensive structures of the past.

The next grand step is thus now being taken - fiscal disciplin - the needed strong fundament for the United States of Europe.

While this is happening, other more practical EU harmonization issues need to progress as well. In the Finnish Real Time Economy program (aiming at cutting administrative cost in half and taking them real time) VAT collection has been chosen as a priority. VAT collection can not be a political issue and should thus be easy to implement.

The model created is very simple and is based on accelerated migration to e-invoicing (which has the 250bn business case as a whole). When in next couple of years almost all invoices are in electronic structured form (Finland already e50% in b2b) each invoice issued will automatically send the VAT information needed (EU-harmonized) to Tax (cloud-based register) in realtime. This will eliminate all VAT-reporting (60m workdays in enterprises - and a lot in Tax). E-invoice payments deliver the VAT to Tax automatically and the net amount to the seller - again saving costs both in enterprises and the public sector. Most devils in the details have already been addressed.

Productivity improvements on a grand scale - and an important step forward for the Single Market. Not to talk about getting tax (a big bite out of the 118bn VAT Gap - our money..) collected. At the same time we can get a firm grip on tje high cost of the grey economy and criminal behavior.

Who can possibly be against this? Nobody I am sure. But how can we get some more steam in the engine? DG Taxud is surely doing its part - but more is needed. Please join the supporters.

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