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04/12/2016

Parliament despondent after failure of Luxleaks committee

Euro & Finance

Parliament despondent after failure of Luxleaks committee

The leaders of the main EP groups decided against a committee of inquiry into Luxleaks.

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The European Parliament’s refusal to launch a committee of inquiry on tax evasion has been a hard pill to swallow for many MEPs, who have been left questioning the role of their institution alongside the new Commission. EurActiv France reports

As the latest Swissleaks revelations raise the pressure to act on tax evasion, Members of the European Parliament are becoming increasingly frustrated by the institution’s impotence.

Last week, the Parliament refused to open a committee of inquiry into the Luxleaks scandal for legal reasons. The Conference of the Presidents decided instead that a special committee would have sufficient power to address the subject. This will be put to a plenary vote on Thursday 12 February.

>> Read: Parliament shuns committee of inquiry into Luxleaks

Manfred Weber, the President of the European Parliament’s EPP group, told EurActiv that the special committee was the only option. “You know that the committee of inquiry was not possible for legal reasons, the mandate delivered by the Greens was too flimsy and vague. No concrete cases of tax evasion would have been brought to the table. We want an inquiry that can bring real transparency to the tax affairs of Google, Amazon, etc.,” the German MEP explained. He added that it was important to keep up the pressure on member states, as real power over the subject resides with them.

But the general feeling is that this pressure will be less effective with a simple special committee, which will not have access to national documents, unlike a committee of inquiry. Only three committees of inquiry have ever been opened since the first legislature of the European Parliament in 1979: on the Community Transit Regime, the Equitable Life Assurance Society and mad cow disease.

Abuse of power case against Martin Schulz?

The refusal of this “fourth” committee has added to the frustrations of the Greens, who initiated the procedure.

“Every time the European Parliament has a sniff of some real power, it takes a step back! If it’s not tax evasion, it’s the budget. This turns the Parliament into a doormat for the heads of state to wipe their feet on,’ said Philippe Lamberts, the President of the Greens in the European Parliament.

His group is considering taking Parliament President Martin Schulz to the Court of Justice of the EU for abuse of power. “There was no debate over the committee of inquiry on tax evasion in the Conference of the Presidents. Martin Schulz alone decided that the committee of inquiry should not be created for legal reasons. We are witnessing the total submission of the Socialists to the EPP,” the Belgian MEP said.

>> Read: Pro-Juncker coalition tries to block Committee of inquiry on Luxleaks

The 13 members of the French Socialist party delegation in the European Parliament had signed the motion for a committee of inquiry. Pervenche Berès, the head of the delegation, said “If the Greens had come to see us about requesting a committee of inquiry, it would almost certainly have seen the light of day.”

A “politically irresponsible” refusal

The Parliament’s reticence on the issue has upset some Socialists. Eric Andrieu called the refusal “politically irresponsible”. He said, “I think the European Institutions should behave in a more mature way in light of what happened in Doubs this weekend.” This remark struck a chord with the Spanish radical left party Podemos, which plans to collaborate with Hervé Falciani, the whistle-blower that handed the HSBC files to the French tax inspectors.

“We will work with Mr. Falciani on tax havens. We are all being robbed and we must act against this attack on democracy,” said the leader of Podemos, Pablo Iglesias, currently campaigning for the Spanish elections in May.

A “puppet” parliament?

The evident discomfort of the elected representatives over the issue of the committee of inquiry reflects a more general feeling that the Parliament is being sidelined by the new Commission.

One MEP said “As a former Prime Minister, Jean-Claude Juncker is inclined to give greater power to the European Council.”

Members have complained that their powers are undermined by the current unofficial, undemocratic structure of governance, which takes the form of a weekly meeting between Jean-Claude Juncker, Martin Schulz, Manfred Weber, Guy Verhostadt and Gianni Pitella.

The European Parliament’s 2016 calendar, drawn up by the EPP, is another subject of debate. “This programme will squeeze the time set aside for the parliamentary committees,” Green MEP Pascal Durand said. This view is shared by Yannick Jadot, who believes the group presidents have reached an agreement to “make a puppet parliament like the [French] National Assembly, where the executive does exactly what it wants”.

>> Read: MEPs urge Schulz to set up inquiry committee on tax evasion

One of the European Parliament’s old guard told EurActiv that “the feeling of frustration also comes from the fact that the Commission is hardly giving the Parliament any work at the moment; for the new members it is not very motivating to come to Strasbourg and not to vote on anything”.

For want of finalised Commission proposals, the MEPs, who have no legislative initiative, must satisfy themselves with meeting Strasbourg’s hordes of lobbyists. Manfred Weber dryly summed-up the situation: “this Parliament is not like a national Parliament, it does not have the same powers”. 

Background

More than 300 companies, including PepsiCo Inc, AIG Inc and Deutsche Bank AG, secured secret deals from Luxembourg to slash their tax bills by billions of euros, the International Consortium of Investigative Journalists (ICIJ) reported on 5 November, quoting leaked documents.

The companies appear to have channelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, the group of investigative journalists said, based on a review of nearly 28,000 pages of confidential documents. Commission President Jean-Claude Juncker, who was prime minister of Luxembourg from 1995-2013, has rejected all accusations of having orchestrated large-scale tax evasion and has even announced a new EU initiative to tackle tax evasion.

Juncker's defence was to deny any wrong-doing and to promise his full cooperation with the Competition Commissioner Margrethe Vestager, who is currently investigating four cases of tax evasion (two in Luxembourg, one in the Netherlands and one in Ireland). 

Further Reading