European Parliament vies to lead Panama Papers inquiry

Alain Lamassoure is opposed to the merging of the new committee on inquiry with the existing special committee on Tax Rulings. [European Parliament]

The European Parliament will vote on whether to create a committee of inquiry into the Panama Papers on Thursday (14 April) – and may decide to merge the new body with the special committee on Tax Rulings. EURACTIV France reports.

The legislature wants to ramp up the pressure on tax havens. In the wake of the Panama Papers revelations, the proposal to give a committee of inquiry the power to investigate the complex financial constructions in the Latin American tax haven, whose clientele is largely European, has found a good deal of support in the Parliament.

First proposed by the Greens on 8 April, the committee of inquiry was initially rejected by the other political groups, who wanted more time to refine the parameters of its mandate. But the basic principle seems to have struck a chord across the different political families.

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“The establishment of a parliamentary committee of inquiry is on the right tracks. I have had positive feedback from the other groups,” said Philippe Lamberts, a Belgian Green MEP and the co-president of the Greens/EFA group.

The proposal has the backing of all the Parliament’s major groups: the Socialists and Democrats, the Conservatives, the Liberals and even – tentatively – the European People’s Party (EPP).

“We want to give the European Parliament the power to get to the bottom of the issue with a committee of inquiry,” said Manfred Weber, the president of the EPP group. But the same centre-right politicians had opposed the establishment of a committee of inquiry last year into the Luxleaks scandal, pushing instead for the creation of a special committee with more limited powers.

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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

“We submitted the mandate proposal last Friday. From this Thursday we will be able to start working on this committee’s mandate,” Lamberts said.

The exact mission of the future body is yet to be defined. But a majority of MEPs hope to see the new committee of inquiry merged with the Tax Rulings special committee (TAXE committee), which is still investigating the tax optimisation and evasion practices of European businesses.

For Lamberts, this is a “way to rationalise the structures of the Parliament”. Another advantage of bringing the two committees together, according to the Greens and the Parliament’s left, would be to upgrade the TAXE committee to a committee of inquiry, giving it more investigative powers than it currently enjoys.

And the similarity of the material being investigated by each committee could be another bonus: the TAXE committee’s focus since early 2015 has been on corporate tax evasion, and the Panama Papers have brought to light the tax practices of individuals. But the same intermediaries and the same tax havens appear in both cases.

Panama Papers scandal puts pressure on EU to toughen tax laws

The Panama Papers scandal has put political pressure on the European Commission to toughen its tax laws, and in particular for multinational companies, EU Economic and Financial Affairs Commissioner Pierre Moscovici has said.

A tax sub-committee

Alain Lamassoure, a French Republican MEP (EPP) and the chair of the TAXE committee, hopes the two committees will not be merged.

“A new ad hoc committee of inquiry would be the best response,” he said. “After Luxleaks, Swissleaks, the Panama Papers, we can expect to see more revelations in the future.”

“The best solution would be to create a sub-committee within the Economic and Monetary Affairs committee, dedicated to the subject of tax,” Lamassoure said.

The creation of permanent committees or sub-committees in the European Parliament is generally reserved for the beginning or end of the electoral cycle.

The Panama Papers exposed offshore companies used to avoid tax, and has embroiled  figures including Vladimir Putin, Ukrainian President Petro Poroshenko,  David Cameron,  Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson, and Climate Commissioner Miguel Arias Cañete.

It comes at a time when tax avoidance is high on the political agenda.

The fight against tax evasion is one of the Juncker Commission's main priorities. News of the systematic, state-sanctioned tax evasion practices of many multinationals based in Luxembourg, known as the Luxleaks scandal, broke shortly after the new Commission was sworn in.

On 18 March, the executive presented a package of measures aimed at strengthening tax transparency, notably by introducing a system for the automatic exchange of information on tax rulings between member states.

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