In the light of the recent revelations about Luxembourg tax avoidance schemes for multinational corporations, a quarter of the European Parliament on Wednesday (14 January) backed the Greens’ proposal to set up a full inquiry committee on tax evasion and dumping.
Managing to get the required support of 188 MEPs (25% of the House), after a first unsuccessful attempt last December, the Greens now want the Parliament’s president, Martin Schulz, to set up the committee.
The Greens insist that such committee is the most appropriate and significant tool available to investigate the so-called Luxleaks revelations and ensure a comprehensive EU-level response.
After the second wave of Luxleaks in December, European Commission President Jean-Claude Juncker took responsibility for his country’s tax practices. He said he would fight tax evasion with the automatic exchange of information during his term in Brussels.
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.
“This is not a committee against Mr Juncker,” said Greens/EFA co-president Philippe Lamberts, speaking to the press in Strasbourg.
“We are not the enemy of Mr Juncker, we are the enemy of tax evasion,” he added, noting that it is time to put an end to the tax competition war among member states as it is hampering the proper implementation of the single market.
Aggressive tax competition by the Netherlands, Luxembourg, Ireland, Austria and others is a breach of the treaty obligation of sincere cooperation between EU member states, the Greens said.
Luxleaks is a watershed moment in the battle against tax evasion, and the issues raised by these leaks must be subject to a thorough inquiry,” said Sven Giegold, the Greens’ economic and finance spokesperson.
The last time that the European Parliament set up a committee of inquiry to investigate cases of breaches or poor application of EU law was on the Equitable Life scandal and the Bovine Spongiform Encephalopathy (BSE), or mad cow disease, before that.
Liberals’ president Guy Verhofstadt said he had no problem with the setting up of an enquiry committee but insisted on the need to accelerate work on the legislative proposals in order to find a European solution against tax evasion and tax fraud.
“European citizens expect us to deliver results by changing tax practices in Europe,” he added.
Greens/EFA economic and finance spokesperson Sven Giegold added: "Ensuring a comprehensive EU response to this scandal is crucial for the credibility of the European institutions and the breadth of political support for the inquiry committee demonstrates this. The fact that it is the pro-European forces in the Parliament that have supported the inquiry committee, and not the far right or UKIP, underlines that this is not an exercise in Europe- or Juncker-bashing but an attempt to ensure a credible EU response."
"We are also continuing to work to improve EU taxation legislation and last week tabled an amendment on the introduction of tax transparency obligations for big corporations. We call on the other political groups, EU governments in Council and the Commission to support this important measure."
Gianni Pittella, S&D Group president, said: "The number of signatures needed to set up an inquiry committee on Luxleaks has been reached. We take note of it. However, we are still convinced that a legislative report, issued by the economic affairs committee, will be the best way to force the Commission to act in order to tackle the unfair tax competition between member states.
"An inquiry committee can only look at past law-breaking. We want to prevent possible new Luxleaks cases in the future. Therefore, we are confident that the inquiry committee will work cooperatively with the economic affairs committee".
GUE/NGL MEPs have backed the creation of a parliamentary committee and said in a note: "This wide support is proof that such a committee is the strongest and most appropriate way for the Parliament to investigate systematic tax dumping and ensure that wide-ranging responses will be provided at the EU level. This is important particularly as member states have continually refused to take serious measures to tackle the problem."
"Given that corporate tax avoidance is - for the most part - scandalously legal in the EU, for GUE/NGL it is a first victory that so many MEPs have expressed an interest in establishing a committee to investigate it. We want to put maximum pressure on the EU-wide systems of corporate tax avoidance and tax evasion and we want the interests of the majority of the EU's 500 million citizens to come before the profit of corporations."
The Luxleaks scandal erupted on 5 November 2014, when the International Consortium of Investigative Journalists (ICIJ) uncovered "industrial scale" tax evasion in Luxembourg at the time when Jean-Claude Juncker was prime minister of the Grand Duchy.
The investigation was based on a review of nearly 28,000 pages of confidential documents, which reveal that more than 300 international companies have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes.
Juncker, who is now President of the European Commission, rejects all accusations of masterminding corporate tax evasion as Prime Minister of Luxembourg and announced a new EU initiative to clamp down on tax avoidance.
Juncker says the tax deals were not illegal and that he will not prevent the commissioner responsible for Competition, Margrethe Vestager, from doing her job in investigating the four cases initially opened (two in Luxembourg, one in the Netherlands and one in Ireland).
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