Much of the daily drip of revelations about European Commission President Jean-Claude Juncker’s ‘intensely relaxed’ approach to corporate tax dodging is hardly surprising. The question is whether we can use it to force Mr Juncker – whose intimate relationship with Luxembourg’s lax tax regime was why Labour opposed him taking up his present post in the first place – into taking action that will tackle these and other abuses.
MEPs and tax justice campaigners must not, however, fall into the trap of giving the Commission an easy out of taking real action – we need action that is strong and decisive. We must resist anything that could allow those opposed to action to kick proposals into the long grass.
The latest ‘Lux Leaks’ revelations claim Mr Juncker, while Prime Minister and Finance Minister – he held both posts concurrently – acted as a business partner who ‘helped solve problems’ for multinationals. At the time, he reportedly said he “should neither feel ashamed nor need to justify” himself for rolling out the red carpet and enabling these companies to dodge billions in tax.
At a time of crippling austerity across Europe, such behaviour is even more unacceptable, as billions in tax revenue goes uncollected as a result of these lax Lux policies, money uninvested in public services for the benefit of the many, with the privileged few literally getting off scot free. No more. No longer can this situation be tolerated.
We need urgent action to tackle tax dodging, yet some of the measures proposed, such as the pointless gimmick of a motion of censure brought forward by UKIP – a party whose leader Nigel Farage has repeatedly come under fire for his tax arrangements, including the setting up of offshore accounts – will do nothing.
The option of a European Parliament committee of inquiry – which has the support of many people and organisations for whom I have great respect – sounds like a strong response, but we are still to be convinced it is the best response.
A committee of inquiry cannot look into issues of national law or taxation law and can only investigate breaches or poor application of EU law; cannot compel countries to provide them with any information; and can only look backwards at activity that has taken place already and. It will not be able to look at the broader issue of tax havens or recommend immediate legislation to tackle this problem.
Labour MEPs have a long history of fighting against tax evasion and aggressive tax avoidance. It was our MEPs who led for the centre-left Socialists and Democrats Group in drafting last year’s European Parliament report that called for all multinational companies to be compelled to report what they earn, where they earn it and how much tax they pay; a common approach to tackling the use of tax havens; and a blacklist of companies engaging in tax evasion.
Today the Commission will unveil its work programme for 2015. This is a chance for Jean-Claude Juncker to show he is a reformed character and promise legislation to stop tax avoidance. This week also represents an opportunity for David Cameron to demonstrate his commitment to tax justice and ensure the issue of tax havens is on the agenda of the European Council summit.
Labour MEPs have long said we would not and indeed did not support Mr Juncker for President of the European Commission, precisely because of his involvement in creating Luxembourg’s lax tax regime.
Today is a big test of whether the Commission will act. The clock is ticking.
Glenis Willmott MEP is Labour’s Leader in the European Parliament