EU lawmakers criticised the bloc’s finance ministers on Wednesday afternoon (6 October) for their inaction against tax avoidance, in a debate devoted to the Pandora Papers, the latest leak of financial documents exposing malpractice and tax avoidance by the rich and powerful across the globe.
Following the publication of the Pandora Papers, the European Parliament convened a debate on the topic at short notice on Wednesday afternoon.
The Papers are the latest in a series of document leaks in recent years. Published by a consortium of investigative journalists, they show how political and economic elites from around the world circumvent anti-money laundering rules and evade taxes through a network of shell companies.
Criticism against member states finance ministers
The debate took place only a day after EU finance ministers took three countries off the EU’s blacklist of tax havens, ignoring the advice of European Parliament members.
Accordingly, many EU lawmakers criticised the finance ministers in Wednesday’s debate.
Paul Tang of the Socialists and Democrats voiced disbelief at the fact that Seychelles were taken off the list just two days after being mentioned in the Pandora Papers.
“It is an insult to citizens who pay their fair share of taxes,” Tang said.
Lídia Pereira of the centre-right EPP called for the blacklist to be turned into a more effective tool, while Manon Aubry of the Left mocked the blacklist as a “carte blanche” for tax evaders.
“Whenever, wherever, we will find the tax evaders […] and we will make them pay,” Aubry said, hinting at a song by the Colombian singer Shakira, who was herself implicated in the Pandora Papers.
Aurore Lalucq, a Social Democrat from France, voiced concern that the revelations could fuel anti-European populism as the repeated leaks could create the impression that Europe is unable to prevent tax evasion.
“But it is not Europe’s fault, it’s the fault of member states,” Lalucq said, pointing to the lack of action by national finance ministers and to the tax havens within the EU itself.
Member states were defended by Slovenian Foreign Minister Anže Logar, who tried to reassure the Parliament that the countries removed from the list of tax havens were still being monitored.
Additionally, he explained that the decision to shorten the list had been taken by diplomats before the release of the Pandora Papers. The finance ministers were only meant to rubberstamp this decision and not to discuss it, Logar explained.
“Let’s send the fleets to the Caribbean”
The lawmakers mentioned a variety of proposals to rein in tax evasion and money laundering in the future. Green and social-democratic politicians said they wanted the blacklist to include more countries, explaining that any jurisdiction that does not require shell companies to make their real owners public should be included in the blacklist.
Radosław Sikorski of the EPP, Poland’s former foreign minister, was much more radical, asking the Commission why the EU could not make it illegal for European companies and citizens to hold accounts in blacklisted countries.
“And if it doesn’t work, let’s send the fleets to the Caribbean, seize the documents and expropriate the lot,” Sikorski suggested.
Economy Commissioner Paolo Gentiloni announced that the EU executive would present before the end of the year a legislative proposal to fight the use of shell companies to avoid taxes.
Andrej Babiš’ shady business
Some members of parliament called out Czech Prime Minister Andrej Babiš, following the revelation in the Pandora Papers that he had secretly bought a castle in the south of France.
Marcel Kolaja of the Czech Pirate Party accused Babiš of hypocrisy and of “doing shady business”.
Martin Hlaváček from the prime minister’s ANO party, which belongs to the Renew Europe group, countered that there were more suspicions than facts to criticise Babiš.
Report on harmful tax practices
The Parliament also discussed a report on EU policy on harmful tax practices.
Aurore Lalucq, the author of the report, stressed the importance of reforming the code of conduct for business taxation. According to her, the code of conduct should be enlarged to include preferential personal income tax regimes designed to attract highly mobile wealthy individuals.
Parliament is due to vote on the report on Thursday. Considering that the report was endorsed in Parliament’s committee on economic and monetary affairs by a large majority, the report is expected to be accepted in the plenary.
[Edited by Zoran Radosavljevic]