Without taxes, there could be no welfare state. Which is why the scandals that the Tax Ministry and tax authority SKAT have suffered in recent years are so damaging to the government’s integrity.
Among the worst of the scandals is the 12.3 billion kroner lost to foreign scammers in falsified VAT rebates for stocks and shares that were never bought. Then there’s SKAT’s digital collections system, EFI, which was supposed to simplify the process of collecting unpaid tax. After launching seven years behind schedule, it failed to make a significant dent in the 74 billion kroner owed to SKAT before it was shuttered in 2015 at a cost of 475 million kroner. The most recent estimate puts the unpaid tax bill at around 80 billion kroner.
The failings at SKAT and the Tax Ministry can be traced to both left and right-wing governments – there have been eight different tax ministers since 2010 from four different left and right-wing parties – and are the result of failed ambitions to cut costs and improve efficiency in tax collection.
Now a cross-aisle coalition of parties has decided to launch a commission to investigate what went wrong.
The Alternative was first to propose the commission in early May, arguing that Parliament needs to send a signal to Danes that it takes the enormous losses seriously.
“The political system needs to show that it acknowledges its failings, takes responsibility, and learns from them. This must never happen again,” Alternativet wrote in its press release.
The Danish People’s Party (DF) and the Social Democrats (Socialdemokratiet) supported the proposal, and together formed a majority to pass it in Parliament.
“It is vital that we rebuild trust in SKAT and in the social contract we have, that everyone contributes,” DF leader Kristian Thulesen Dahl stated in a press release, adding that he wanted the commission to report in stages, so that its lessons can be quickly integrated into the rebuilding of the Tax Ministry and SKAT.
Among the toughest critics of SKAT’s failings has been Martin Krasnik, editor of Weekendavisen, who calls the 80 billion kroner unpaid tax bill one of the greatest scandals in modern history – for while the welfare state was deprived of funding, the wealthiest profited from tax cuts.
“Think of the teachers, social care assistants or beds in psychiatric hospitals we could have afforded,” Krasnik wrote in a leader, before laying the blame primarily on a 2005 reform by the coalition Liberal (Venstre) and Conservative (Konservative) government that cut a third of the staff at SKAT. Their roles were meant to be replaced by the ineffectual EFI.
Prime Minister Lars Løkke Rasmussen was also in power then, and Kristian Jensen, the tax minister at the time, is currently finance minister.
“We are ruled by politicians who have wasted our money and ignored their responsibility. Some would say their motivation was ideology, the liberal fight against the state, but the explanation is more likely the pursuit of power and ordinary incompetence,” Krasnik wrote. M