SAK publishes a long list of
initiatives to tackle grey economy
Helsinki (02.11.2010 - Juhani Artto) Data on the ever growing grey economy
worries the union confederation SAK. "It is not only a question of lost
taxes and fees but also the negative impact on the fairness of competition
in business life, on the status of employees, on general tax morality and on
the credibility of the entire tax system", SAK says in its large and
detailed initiative on the grey economy, published on Tuesday.
The document includes 25 proposals on how to amend current legislation to
make it a more effective weapon and barrier against the grey economy. These
proposals are grouped into six blocks.
The first aims to put domestic entrepreneurs on an equal footing
with foreign companies. As the situation now stands, according to SAK,
foreign companies can easily evade their tax and other monetary obligations.
It helps them win tenders unfairly as their costs are lower than those of
their Finnish competitors. Hundreds of foreign companies, especially in the
construction, metal (engineering shop) and cleaning branches, take advantage
of the legislative loopholes and lack of overall effective control. These
companies employ tens of thousands of employees in Finland annually, often
paying them less than that set down in collective agreements.
The second block of legislative initiatives concerns contractor's
obligations and liability when work is contracted out. Originally, the idea
of the legislation was to make contractors liable for checking and making
sure that their subcontractors take care of their tax and other duties
properly and according to the law. The act was amended in 2006 but, in
practice, it remains ineffective. SAK's detailed proposals would essentially
increase responsibilities on companies who then contract work out. SAK also
wants European level legislation concerning contractors' liabilities. It
says that the resolution, approved by the European parliament on 3 March
2009, offers a good starting point for much needed legislative work. This
resolution supports European legislation on a contractor's liabilities when
it comes to wages and salaries.
The third block focuses on ways to prevent employees from being abused. SAK
seeks legislation that would give national union organizations the right to
sue in the courts, on behalf of an employee, even in cases where the
employee concerned has not given the organization the authorisation to do
so. "Such a right would have a significant pre-emptive impact especially in
wage discrimination cases towards foreign employee", SAK says.
Another proposal is this:
that the EU should have its own occupational safety agency. It could, for
example, monitor how employees' rights are being enforced.
The other three blocks of initiatives deal with tax control on capital
gains, punishment for economic crimes and several other issues.
And finally, there is the big question of the lack of resources and
powers available to authorities in tackling the grey economy. SAK is at
pains to stress, as it has done so many times in the past, that investment
in these resources is not an expense but an investment that brings multiple
dividends to the state and society in the form of increased tax revenues,
healthier competition and improved rights' protection.