juncker

Eurosceptic MEPs have tabled a motion to topple Commission President Jean-Claude Juncker. The no-confidence vote was called in response to revelations that, during Mr Juncker’s time as Prime Minister, Luxembourg authorities reportedly cut deals with global brands such as Pepsi, Amazon, Ikea, JPMorgan and Deutsche Bank to pay as little as 0.25% tax on profits.

However, the move is unlikely to succeed as Juncker (who denies he knew personally about the tax deals) can still count on the support of the two largest groups in the European Parliament – his own centre-right European People’s Party and the centre-left Socialists & Democrats.

Nevertheless, the liberal ALDE group of MEPs, whilst refusing to back the no-confidence motion, have called for an independent investigation to be launched examining Juncker’s role in the affair. Some of our readers would agree, and we had a comment from Marcel, who fully supported the idea, though he thought it was unlikely to happen.

When we spoke to Richard Corbett, a British Labour MEP, we asked him if he agreed with Marcel:

But why are eurosceptics – who fiercely defend national tax sovereignty – leading the charge? Some of our readers pointed out that the tax deals, whilst heavily criticised, did not necessarily break any laws.

One of our commenters, S.K. from Switzerland, argued that it was purely a matter for each individual Member State what level of tax they decided to charge. How would Richard Corbett respond?

We also spoke to Ingeborg Gräßle, a German Christian Democrat MEP who sits in the same party as Juncker in the European Parliament and is Chair of the Budgetary Control Committee. We put a comment to her from one of our readers, Ivan, who thought there was now a conflict of interest in Juncker heading a commission which is currently investigating whether Luxembourg broke EU rules on its tax dealings.

Specifically, the Commission is currently investigating whether tax incentives offered by Luxembourg to Amazon and Fiat constitute unfair state aid. This investigation was launched before the Luxembourg Leaks revelations (and before Mr Juncker became Commission President) but, nevertheless, should he publicly recuse himself from any involvement in the tax probes?

We asked Gräßle if she agreed with Ivan that there was a conflict of interest:

The Competition Commissioner, Margrethe Vestager, has to make sure the work is done without any interference at all, and I think the Commission President would be well-advised not even to ask about the investigations otherwise it would represent a conflict of interest.

But I think competition probes are one of the really old tasks of the European Commission, and they are well-run and examined. That’s why I think it can be done without any interference. But, of course, this is a really hot question. I think Juncker will be wise not to interfere at all. That’s what we have to ask him to be sure of. In the interest of his own credibility, he has to make absolutely sure that there is no interference at all.

What would she say to the comment from S.K., arguing that Luxembourg has the right to tax companies and people any way they want, whether high, low or not at all?

The Commission does not examine tax rules in itself. It does not examine a system, it examines just individual cases where we think there was a violation of EU law. That’s why it’s important not to over-estimate what the Commission investigations can achieve, they are not empowered to pass judgement on a country’s tax system. And that’s why I would like to say I am grateful for the comment from S.K. from Switzerland.

There is a kind of hypocrisy at play, because a lot of Member States have special tax rulings. In the Luxembourg case, and this is perhaps the most dramatic, we have had a lot of resistance for years against closer EU cooperation in tax matters. In fact, we have had a lot of resistance even agreeing to coordinate the fight against tax fraud!

I’m the rapporteur for the tax agreement with Lichtenstein, and we’ve been waiting now for nearly 8 years for action from the Council, and two Member States from the Council have blocked this tax agreement – Luxembourg and Austria. The EU cannot survive if everybody tries to get money from companies which run their business in other Member States. Europe cannot survive if we work like that. That’s why I welcome the discussion, because I think it’s useful that we bring these issues forward.

The Commission has, for a long time, asked to have more European competencies over harmonisation of the tax bases in Europe. As it is a unanimity decision, it has always been blocked by some Member States. That’s why this is a big chance for Europe on the table, and I think we should take this chance.

It’s difficult to estimate the scale of tax avoidance and evasion in Europe. Perhaps understandably, the companies and governments involved work hard to keep their tax dealings secret. Nevertheless, some estimates have been produced – and we’ve put them into an infographic below to illustrate how much tax money is lost each year (click for a larger image):

TH_3_tax evasion

Finally, we asked for a response to some reader questions from Daniel Rosario, a Spokesperson for the European Commission. Did he agree with Marcel that President Juncker’s authority had been undermined by the Luxembourg Leaks affair?

rosarioNot at all. The feeling that we have, and that President Juncker has conveyed, is that this story and revelation in no way undermines his authority and legitimacy as President of the Commission to push for the EU to adopt strict rules against tax evasion.

In fact, this was already a commitment taken by President Juncker even before taking office. Back in July, he addressed this issue in front of the European Parliament, and now he will try to materialise these proposals into concrete results. If this story has an effect, we hope it has the effect of raising the problem at the European and global level, and also putting pressure on all actors, including EU Member States.

How would he respond to the comment we had from David, arguing that the new initiatives should be launched at the EU level to crack down on tax avoidance. What, practically, will the Commission do now?

rosarioOn its side, the European Commission will now do two things. Firstly, the commissioner responsible for taxation, Mr Pierre Moscovici, will table a new proposal to implement mandatory exchange of information on tax rulings. Secondly, Mr Moscovici will also revisit an existing Directive, the Common Consolidated Corporate Tax Base (CCCTB) proposal. The discussion over this Directive has been dragging on since 2011, and we want to revisit it and make it more meaningful in the framework of fighting against tax evasion.

But this also gives us the opportunity to call to the attention of everyone involved that these decisions are, in the end, taken by Member States. So the Commission can only go as far and as fast as Member States allow us to go. And the CCCTB proposal is a good example of how, even though Member States say publicly they are very committed to a good result, when the discussion goes to the technical level we see all kinds of difficulties arising.

Should the EU Commission get new powers over tax in response to the Luxembourg Leaks affair? Or is tax a sovereign issue, and should countries like Luxembourg be able to charge whatever rate of tax they want? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions!

IMAGE CREDITS: CC / Flickr – European Council


42 comments Post a commentcomment

What do YOU think?

  1. avatar
    Herbert

    Junkers is just one out of inumerous liers, persuing exclusively personal ambitions, not interested at all in defending european people’s interests !

  2. avatar
    Michael Ryan

    Of course they have. How can he lead the tax reform needed across the union with a track record of aiding tax avoidance

  3. avatar
    Spyros Kouvoussis

    it’s a sign of an unhealthy situation the fact that we have to debate whether Mr Junker should resign or not. How can anyone argue that someone who helped multinational corporations get away without paying any taxes can actually reform the tax system so that corporations don’t commit tax fraud? It’s like putting the wolf keeping safe the sheeps, as a greek phrase says.

  4. avatar
    George Danieldsg

    Luxeburg tax evasion was kwown many years bebore.And is continuig.Everyone in EU is responsible.The matter was used to get rid of mr Juncker from those they don t like his intentions.

  5. avatar
    Paul X

    The undemocratic way Juncker was “installed” in power already undermines any legitimacy he pretends to have, his corrupt past is just another nail in his coffin

    • avatar
      Marie Ximena

      Juncker was “installed” in power the exact same way as Cameron, Merkel and every other Prime Minister (or equivalent) in parliamentary regimes across Europe. He was the designated candidate of the party with the largest share of votes in the newly elected Parliament and which managed to form a coalition mustering an absolute majority.
      Voters have placed him where he is, as opposed to all the Presidents of the European Commission who have preceded him and who where indeed “installed” in power by member States, behind closed doors, without any transparency nor respect for the will of the European people. Please explain to me how Juncker doesn’t have the required legitimacy to preside the Commission. I may be wrong, but I strongly suspect that you are one of those hysteric Euroskeptics who contest the legitimacy of everything European without considering the facts.

    • avatar
      Paul X

      Juncker was “installed” by his party after the election, no-one actually voted for him

      In normal democratic elections you vote for a party with full knowledge who is the leader of that party and who will be in charge if that party wins

      Surely even you can tell the difference?

  6. avatar
    Ivan Burrows

    ‘This investigation was launched before the Luxembourg Leaks revelations (and before Mr Juncker became Commission President)’

    So why was Juncker not asked about his role in more depth during his interrogation by MEP’s and why was he subsequently handed the job ?

    Not only has Junckers credibility been compromised but also that the European Parliaments by not scrutinising him correctly.

    It is now clear that the back room deal done to get Juncker & Schulz presidential positions was done at the exclusion of the most basic of parliamentary duties.

    All we have to work out now is was it incompetence or a federalist coup d’état ?

  7. avatar
    Erich Scheffl

    EU was made for some “Lobbyists”. Not for the people. Even now, within the biggest crisis. Shall this be human?

  8. avatar
    ironworker

    Have Luxembourg’s tax revelations undermined Jean-Claude Juncker?

    Remotely. Innocent until proven guilty, otherwise just tabloid media subject. However “corpies” have to pay dearly.

  9. avatar
    Nuno Sardinha

    If Mr Juncker had knowledge of this secret scheme/agreement with multinational companies to avoid paying tax in home countries? lost its credibility. I must remind, Mr Juncker asked sacrifices on European countries (Portugal, Greece and Ireland) without money in their budgets while helped resident companies from avoiding domestic tax.
    If this information is true, Mr Juncker moral authority is lost forever!

  10. avatar
    Ivan Burrows

    .

    ?This investigation was launched before the Luxembourg Leaks revelations (and before Mr Juncker became Commission President)?

    So why was Juncker not asked about his role in more depth during his interrogation by MEP?s and why was he subsequently handed the job ?

    Not only has Junckers credibility been compromised but also that the European Parliaments by not scrutinising him correctly.

    It is now clear that the back room deal done to get Juncker & Schulz presidential positions was done at the exclusion of the most basic of parliamentary duties.

    All we have to work out now is was it incompetence or a federalist coup d?tat ?

    http://www.bloombergview.com/articles/2014-11-09/jeanclaude-juncker-needs-to-go

  11. avatar
    Alexander Grech

    High tax rates in Europe made evasion a natural right for many.Juncker was helping companies to avoid it. Junker,if you lower tax,every business man will declare everything,and European tax havens will die a natural dead.

    • avatar
      bert van santen

      The EU was and will be a large mistake in every way

  12. avatar
    eusebio manuel vestias pecurto

    The Executive of Europe will be necessary to substantiably reduce the burden tax avery inhabitant of Europe for a safe and avoid future tax revolution resulting in safe boycott laws and Europe standarts

  13. avatar
    Yvetta

    Not at all…Juncker is not Luxembourg and Luxembourg is not Juncker…

  14. avatar
    Otto Dalakishvili

    No, because it seems that a dearth of strong opposition ( Eurosceptic MEPs ) in parliament not being able to change situation radically to this direction.

  15. avatar
    Martin Unterholzner

    The current tax affair will again put attention to an old topic, which is a good thing. Maybe some people might also lose trust in Juncker or the whole commission. However, Juncker did not lie or change his position about this issue. He always publicly committed to tax competition, even during the European election campaign. I personally do not agree with him, because I believe the term “tax dumping” would be more appropriate and this can only be distructive in the long term.
    Still, the conservative parties got the majority at the election. Hence, I do respect the result. The conservative parties want to keep all the competences on tax issues on a national level. Consequently, they should not complain about countries, who boost their tax revenues by attracting corporations with low taxes.
    Europeans must make up their mind: either accepting tax competition with consequences as seen in Luxembourg or allowing EU-institutions to intervene in tax issues.

  16. avatar
    EU reform- proactive

    “Mr.Euro”, big fish, EC’s, “Christian” EPP and PES choice Mr. JC Juncker’s “leadership qualities” should be tested against well known ethical and moral leadership standards! Did he lead in the past 18 years in a manner that respected the rights and dignity of others?

    “To create lawful and ethical NATIONAL tax regulations, they need to be proportionate and specifically aimed at preventing “purely artificial arrangements”- such reads the EU’s pc wish list!

    It reflects the spirit of a past, present & future “FAIR EU”! JCJ as a rabid pro EU pioneer failed in Luxembourg to observe these ethical guidelines & it exposes his actions as hypocrisy!

    JCJ may have become a local hero to some- in his capacity as longest serving EU PM after resigning in 2013- in a 500k strong peoples feudal Grand Duchy’s fiefdom. As an EU chief architect he created- in parallel- EU’s top tax haven at home and Luxembourg became by far the richest EU country in GDP income per capita. It attracted more banks than ‘grocery shops’ and offered huge tax advantages for the biggest global players! Acting as a tax avoidance “black hole”- did it not leave others astonished or poorer? This does not bode well for the secretive TTIP negotiations presently underway!

    By defending his aggressive past tax evasion schemes as “other do likewise”- he forgone trust & failed the TEST for a revered & ethical EU leader tasked to represent 500 million citizens! A rather controversial report:

    http://www.businessinsider.com/luxembourg-2011-09?op=1

  17. avatar
    Tarquin Farquhar

    This question assumes that JUNKEY was not previously undermined.

  18. avatar
    Marcel

    Has Juncker been undermined? Has he lost authority? Well he never had any to begin with, you cannot lose what you don’t have.

    Of course, there were some who warned about what a bad apple this Juncker dude was, but as usual the Europhiliacs didn’t listen and just barged ahead anyway.

    I’d like to know how do I get such a nice tax rate for myself? Either one of those rates corporations got in Luxembourg, or the same rate Juncker now has.

    What? I should pay 40% or more? Someone explain to me why I should do that when Juncker and his friends don’t.

  19. avatar
    David Fuzzey

    It won`t. The eu will as usual ignore any opposition and carry on….junkers high level of corruption is perfect for being one of the eu `elite`.

    • avatar
      hans van veen

      Agree!!!

  20. avatar
    Francesco Totino

    This is what EU should do :
    “Fiscal compact” agreement in Europe has been a good first step …. now we need

    1 ) a Global ” Fiscal Compact,

    2) a global Balanced Budged in any other world countries constitution

    3)to abolish all worldwide Tax Havens ..( only one open is sufficient to neutralize much of the effect of tax and price policies in the rest of the world )

    Fixed this worldwide FINANCIAL /ECONOMIC target any single countries should simultaneusly start to reform deeply his domestic not only FINANCIAL but also POLITICAL AND PUBLIC Structure, a structure that has gained in the last years more and more importance in the success of all the economic policy actions. In particular a factor that affects economic development and that is common to both Politics and Pubblic sector is the corruption phenomena linked to political patronage,. Corruption has blocked the efficiency of the social system at any level in some EU countries like Italy, Spain , Portugal, Greece and also in other countries

    From these point of view EU and US and other worldwide countries should fix immediately some social standard measures index to be applied by the singles EU, US other country members that are particularly affected from inefficiency in political and public sector system.
    Most of the time Financial results in single countries come out only if some political and pubblic reforms have been done . To implement this “Public” reorganization process ( from information, education , management and control) is strategic that “European Digital Agenda” has been realized as soon as possible .

    4) a much more active role of international institutions like IMF , UN and so on in managing international financial and economic rules .

  21. avatar
    Graham Lyons

    This scheme is simple and fair:
    A company, let’s call it Junckalux, sells its products to a number of countries. Consider one example EU country called Anyland. Under new EU tax rules Junckalux is taxed on profits from the revenue it receives from Anyland – and at Anyland’s corporate tax rate. If Junckalux fails to pay the tax due it will be banned from trading in Anyland.

  22. avatar
    maura adams

    From what I have heard Mr Juncker is not a fit person for such a job, in fact I would not hire him to clean my home. What he says implies a very devious man. He should not be in charge of anything least of investigating his own countries dirty tax deals. Do I believe he didnt know multinational were funnelling money through his banks to dodge tax in the 20 years he ran the country, NO.

  23. avatar
    Robert Stevenson

    Juncker is a corrupt son of a bitch and should not be allowed within a hundred miles of an EU presidency.

  24. avatar
    Graham Lyons

    Juncker is corrupt and should not be allowed within a hundred miles of an EU presidency.

    Leaving out “son of a bitch” is a more effective to send.

  25. avatar
    Graham Lyons

    Leaving out “son of a bitch” is a more effective to send.

    Leaving out “son of a bitch” is a more effective message to send.
    Adding “message” makes sense of the sentence.

Your email will not be published

Leave a Reply

Your email address will not be published.

Notify me of new comments. You can also subscribe without commenting.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

By continuing to use this website, you consent to the use of cookies on your device as described in our Privacy Policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them.