Historical Background of ECON Tax evasion and tax avoidance: The unsolved issues of Europe’s fiscal policies. The Panama papers and Luxleaks scandals have revealed that large networks of individuals and businesses utilise loopholes in financial markets’ regulations to lower their tax contributions and shield their capital offshore. With tax avoidance and evasion costing billions to European countries each year, what steps should be taken to ensure a fairer and more effective taxation while respecting the diversity of political stances taken by national governments on the issue? Taxes are regulated by a state or a local administration to both finance the services it provides to the population (from public healthcare to education to pensions) as well as to regulate the consumption of more hazardous substances (alcohol, tobacco, etc.). However, as with many regulatory schemes, no fiscal system is immune to loopholes - which can be exploited by taxpayers to legally reduce their annual contributions. Financial and consulting firms came to offer tax management services specifically aimed at tax avoidance; and due to the high fee applied, the greatest beneficiary of this kind of service has always been the wealthiest portion of the population. While tax avoidance is legal, tax evasion is not. As many data leaks from several large consultancy firm and banks have shown during the last five years (Panama Papers, SwissLeaks, LuxLeaks), evasions schemes are not uncommon among the global Êlite. Albeit public scrutiny has reached a considerable number of companies, politicians, managers and their associates, rules still signif-
icantly diverge among countries and very few cross-border initiatives exists. The question of tax harmonisation is also becoming increasingly relevant. Fifty years of globalisation and integration of financial markets have created the ideal conditions for corporations and hedge funds, in particular multinational ones, to relocate their financial headquarters wherever the tax regimen is the most convenient - regardless of where the production of good and services occurs. In other words, it has become increasingly easy to move to countries whose relatively small population is in need of fewer state expenditures, which in turn allows the Government to set a low corporate tax rate. On the other hand, the relocation of big corporation means a massive loss of income for the abandoned country of origin, and an inter-state competition towards decreasing the fiscal burden for corporations (often times balanced by an increased burden on income tax or VAT).