‘Sweetheart’ tax deals inquiry a setback for Jean-Claude Juncker
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The European Parliament is poised to launch a full inquiry into sweetheart tax deals with multinational companies, in a political setback for Jean-Claude Juncker, the European Commission president and former premier of Luxembourg.
More than a quarter of MEPs — many in defiance of their party leaders — have called for a thorough probe into state-facilitated tax avoidance across the EU, sufficient to trigger a formal request for a committee of inquiry.
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Senior MEPs say the groundswell of opinion makes it all but impossible to stop a full inquiry, which is likely to include public hearings with top politicians and chief executives.
Mr Juncker has denied being the “architect” of Luxembourg tax system and insisted the Grand Duchy’s tax deals were signed off by an independent authority.
Last year he saw off a motion of censure over the issue, led by the anti-EU UK Independence party and France’s rightwing National Front.
Sven Giegold, one of the Green MEP who led efforts to gather the 189 signatures, said: “The fact that it is the pro-European forces 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.”
The parliament’s main political group leaders had assured Mr Juncker privately last year that they would stop an inquiry that might politically embarass him over Luxembourg’s hosting of large-scale tax avoidance.
Yet dozens of MEPs rebelled to demand a full committee investigation, including senior MEPs from Mr Juncker’s own political family.
Any parliamentary inquiry would not focus solely on Luxembourg or Mr Juncker but examine tax arrangement for multinationals in many EU states. It would run in parallel to the existing commission state aid investigations into tax arrangements between Ireland and Apple, the Netherlands and Starbucks and Luxembourg’s rulings for Fiat and Amazon.
Martin Schulz, president of the parliament, is known to have private concerns over the legal basis for the inquiry.
Gianni Pittella, the Socialist group leader, said he would “accept the will of the parliament” but added: “We do not believe a committee looking at the past is the best way to tackle future tax fraud and avoidance.”
If formed, the inquiry committee, whose mandate and make-up would be decided by a majority vote in parliament, would be the first in almost a decade.
Philippe Lamberts, leader of the Greens, said parliament should “move swiftly and take relevant steps to ensure the committee is set up, so no more time is lost”.
MEPs from the economics and monetary affairs committee were tasked last year with looking into tax avoidance and drawing up proposals, but the initiative was low key and did not involve a special committee.
Although any inquiry committee would have rights of access to some EU documents, parliament lacks tough investigatory and subpoena powers. Recent “temporary committee” probes into contentious areas such as Central Intelligence Agency prisoner rendition and the Mafia at times struggled to gain political traction or uncover fresh material.
However, senior EU officials think a full inquiry into tax avoidance will benefit from the political storm over tax avoidance and will enjoy more leverage to call witnesses and hold companies to account. The reputations of the likes of Starbucks, Amazon and Google have been hit by tax avoidance inquiries by the UK parliament, which has similar powers to that of its EU counterpart.
The attempt to gather signatures was seen in Brussels as an important test of the strength of the parliament’s EPP-Socialist coalition, which is supporting Mr Juncker. However, the failure to contain calls for an inquiry is a sign of how hard it may be to maintain the alliance between the parliament’s main centrist, pro-EU parties.
