Martin Schulz, president of the European parliament, has warned that revelations of tax evasion by major companies were leading to a loss of trust among the European public.
Speaking to CNBC in Brussels, Schulz said the issue could lead to "very difficult social problems" in Europe if tax laws were not "transparent."
Tax evasion is expected to be high on the agenda as EU leaders prepare to meet at the European Council Summit on Wednesday in Brussels. A number of high-profile companies such as tech giants Google and Apple, coffee chain Starbucks and online retailer Amazon have come under the spotlight for alleged tax avoidance.
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"Tax evasion is the core of the debate because it is a question of solidarity. On the one hand, taxpayers are asked to pay for the enormous losses of the banking system or to save countries [or] make sacrifices on their pensions and salaries and they see that rich people can take their money out of Europe and into tax havens," Schulz said.
His comments came as European lawmakers adopted a resolution on Tuesday urging member states to halve the estimated one trillion euros worth of uncollected taxes a year by 2020.
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"My concern is the loss of trust of citizens…let's reform the system to bring back solidarity or we will enter into a phase of very difficult social problems," Schulz said.
Criticism has grown in recent months over the lack of financial transparency in countries such as Austria and Luxembourg. Schulz said the EU had to present a common front on the issue.
"We must be coherent within the European Union otherwise we cannot ask other countries to be transparent," he said.
-By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt