European Commission President Jean-Claude Juncker on Tuesday said he never struck any tax deal with any company in his capacity as a Luxembourg minister and that his credibility should be measured ”based on the work I’m doing now”, while aligning himself with the European Parliament’s fight for tax justice.
Juncker was invited to a hearing of the committee of inquiry on money laundering, tax avoidance and tax evasion, better known as the Panama Committee.
He was asked to speak about ongoing and upcoming Commission initiatives on tax justice, as well as his personal responsibility for Luxembourg’s controversial tax regime.
MEPs criticised Juncker, in his former capacity as Luxembourg’s prime minister and finance minister, for his alleged role in blocking certain legislative initiatives seeking to change the European tax regime.
They also questioned his credibility in the fight for tax justice in his current function as president of the European Commission.
Yes to tax competition, but ‘fair’
Juncker denied he had ever struck a deal with any company to attract them to Luxembourg and said he always believed and “still believes” in tax competition.
He said his former and current positions on the matter were not contradictory, but that he was merely focusing now on ”fair” tax competition.
When asked whether he knew about practices such as those revealed by the Panama Papers, or Luxleaks, before these surfaced, Juncker said he had no knowledge of “how many Germans came to Luxembourg to hide their money”.
But, thanks to these revelations, he said, ”the paths and side-paths” being used by multinational corporations to avoid taxes have come to light.
In that same context, Juncker announced that the Commission was working on a proposal to better protect whistleblowers.
President Juncker indicated in his opening remarks that voters’ trust had been seriously damaged by illegal or immoral tax practices by multinational corporations and that the situation had become ”intolerable”.
He said the Commission and the Parliament shared the common goal of putting an end to these practices quickly.
Praise for active Commission
Some MEPs who took the floor praised Juncker’s Commission for being the most active yet when it came to tabling initiatives to fight tax evasion and avoidance.
The Juncker Commission has so far tabled 12 pieces of legislation on different aspects of tax justice, and the president announced that number 13, a directive targeting the role of intermediaries, was to follow in June and expected to enter into force on January 1, 2019.
Juncker and the committee members also agreed on a number of other subjects.
The automatic exchange of information, agreed on by the EU member states, excludes the right for the Commission to access that same information.
Juncker said this situation was ”not satisfactory” and that his team would keep working to change it.
Blind to the past
Juncker claimed a lack of resources at the Commission had further complicated its work. Only six people work for the Commission’s task force on ”financial crimes”.
Juncker agreed with a number of MEPs that his institution needed to review the situation and reallocate resources to better respond to today’s needs.
Some MEPs raised the responsibility of the European Council in blocking progress in the fight for tax justice.
Juncker said he believed the requirement for unanimous votes on tax questions needed to be replaced by a system of qualified majorities to avoid single member states blocking important progress.
Green MEP Sven Giegold, one of the most vocal critics of Juncker, commented shortly after the hearing.
”Juncker may be blind to the past, but he’s now made some concrete commitments for the future,” he said.
”(His) commitments today represent the foundations for greater tax justice in Europe.”