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05/12/2016

Pro-Juncker coalition blocks committee of inquiry on Luxleaks

Euro & Finance

Pro-Juncker coalition blocks committee of inquiry on Luxleaks

Leftist MEPs are trying to set up a committee to tackle tax evasion.

[European Parliament/Flickr]

The leaders of the European Parliament’s grand coalition have told their members not to support the Greens’ proposal to create a committee of inquiry on tax evasion. The ecologists need around another 40 signatures in order to bring the proposal to a vote in Parliament. EurActiv France reports

The different political groups within the European Parliament continue to disagree over how to respond to the revelations of systematic tax evasion by numerous multinationals based in Luxembourg.

The Commission has announced new legislative initiatives to fight tax evasion, but the measures available to the European Parliament, which does not possess the power of legislative initiative, are more limited. The Greens are campaigning for the launch of a Committee of inquiry on tax evasion and fiscal dumping.

>> Read: Juncker breaks cover on Luxleaks

Committee of inquiry

A committee of inquiry would give MEPs “access to confidential documents and extra resources, both in terms of funding and personnel,” according to the radical left group GUE/NGL, which is supporting the Greens’ initiative.

In order for the committee to be established, the Greens must collect 188 signatures, 25% of all MEPs. The Committee’s responsibilities must then be confirmed by the Conference of the Presidents of the political groups.

Once these hurdles have been overcome, the committee must be approved by the European Parliament in a plenary vote.

The political groups that joined forces to elect the Juncker Commission have instructed their members not to back the initiative.

In an email to the whole S&D group, the group’s president, Gianni Pittella, wrote that “the Socialist group is strongly opposed to this Committee, because due to the Parliament’s rules, it will only have the power to inquire into infringements or misapplication of the common European law, which is far too restrictive”.

But dissidents are making themselves heard. The French Socialist delegation has expressed its support for “a Committee of inquiry that will not be limited to the actions of Luxembourg”. According to a source in the European Parliament, “some ALDE members have also offered their support”.

Own-initiative report: a consolation prize

The Socialists, the EPP and the Liberals are advocating an alternative to the committee of inquiry: an own-initiative report, to be produced by the European Parliament Committee on Economic and Monetary Affairs. These reports, which contain non-binding recommendations to the Commission, rarely have much impact.

The co-President of the Green group, Philippe Lamberts and the French MEP Eva Joly said, “This is a very limited tool that is not, in itself, an adequate response from the European Parliament to the tax evasion scandal.”

The GUE/NGL responded that “an own-initiative report from the Parliamentary Committee on Economic and Monetary Affairs, suggested by the EPP, S&D, ECR and ALDE groups is unacceptable!”

Parliament divided over Luxleaks

This is not the first time the European Parliament has tried to have its say over the Luxleaks scandal. MEPs were already divided over the affair in November.

The left group tried to rally support among the other groups for a motion of censure against the Juncker Commission, but their refusal to accept the signatures of MEPs from the European Parliament’s far right and Eurosceptic groups led to the motion’s failure.  

>> Read: Marine Le Pen and Nigel Farage join forces against Juncker (in French)

Nigel Farrage’s EFDD group and the far right non-attached members, led by Marine Le Pen of the French National Front, then brought their own motion of censure, which was voted down at the Strasbourg plenary session in November.

>> Read: Juncker emerges stronger from Luxleaks censure motion

Positions

"The Luxembourg leaks scandal showed that multinational companies use the tax laws in force within the EU, with the complicity of certain governments, in order to avoid paying billions of euro in tax," Lucie Watrinet, of CCFD-Terre Solidaire, said. "It is essential that we take action now: Europe’s citizens find it increasingly unacceptable in these times of economic crisis that big businesses should be avoiding tax on an industrial scale".

Manon Aubry, from Oxfam France, said "the European Parliament has to do everything within its power to rectify this widespread abuse, beginning with establishing a strong, well-resourced Committee of inquiry. Any weaker measures, like an own-initiative report from an existing committee, would give the impression that MEPs are willing to turn a blind eye to this shameful affair, which should be dealt with as a matter of urgency. It is estimated that France loses 50 billion euro each year to tax evasion, and developing countries even more!" 

Background

More than 300 companies, including PepsiCo Inc, AIG Inc and Deutsche Bank AG, secured secret deals from Luxembourg to slash their tax bills, the International Consortium of Investigative Journalists (ICIJ) reported on 5 November, quoting leaked documents. Commission President Jean-Claude Juncker, who was prime minister of Luxembourg from 1995-2013, has so far declined to comment.

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.

Further Reading