The end of the Spanish peseta and the birth of the euro is fuelling an “amateur tax-cheating” scandal because millioans of European Union citizens are worried about losing stacks of cash they have been hoarding and hiding when they have to declare their savings in order to have it all exchanged in to euros. But while the Spanish police, who admit to having intercepted over half a million pounds this year, are trying to crackdown on the tax-cheats, Brussels and the European Union is also about to launch its own offensive. The European Commission is expected to adopt proposals to crack down on fraud against the European Union's 95 billion euro budget. The proposed new legislation, which defines the criminal offences and proposes minimum sanctions, seeks to harmonise existing laws in the 15-nation bloc in an attempt to stamp out billions of euros of fraud. “The proposal covers every kind of fraud from false customs declarations to false claims of expenditure,” a Commission official said. “What makes the difference is that the fight against fraud will be under the umbrella of (European) Community legislation as opposed to being a pure matter of cooperation between member states,” the source added. A Commission report last year estimated that the EU had lost more than 600 million euros in 1999 due to fraud and irregularities. The figure did not include tax revenues lost because of cigarette smuggling, which according to the Commission source is the number one form of fraud, costing the EU billions of euros every year. “Each container of cigarettes smuggled into Europe equals one million euros worth of (lost) taxes and several thousands of containers arrive each year,” the source said. Part of the EU's budget is financed by customs duties and a proportion of member states' VAT returns. Under the new law, which has to be approved both by the European Parliament and the EU governments, serious cases of fraud could be punished with jail sentences.

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