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Juncker Questioned in European Parliament Over Controversial Tax Scheme

13/11/2014 15:42 GMT | Updated 13/01/2015 10:59 GMT

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Jean-Claude Juncker during the debate in Parliament (photo copyright European Parliament)

Jean-Claude Juncker denied any wrong-doing during an EP debate prompted by the so-called Lux leaks revelations of secret deals granting preferential tax treatment to multinationals in his native Luxembourg. The president of the new European Commission was summoned to the Brussels plenary on 12 November as MEPs wanted to question him about tax rulings that are estimated to have cost other European countries billions of euros. The case is currently being investigated by the Commission. However, MEPs want the scope of the inquiry to be extended and called for more transparency as well as more action on tax evasion in Europe.

Juncker said that the tax rulings in Luxembourg were not illegal even though he admitted that there probably was "a certain amount" of tax avoidance in Luxembourg, as in other EU countries. "We find this everywhere in Europe because there is insufficient tax harmonisation," he said, adding that Pierre Moscovici, the commissioner responsible for taxation, would come up with proposals for an automatic exchange of information regarding national tax rulings.

During the debate MEPs highlighted the problems caused by tax evasion and said more measures were needed to tackle it.

Manfred Weber, president of the EPP group, commented: "It is not the EU that failed, but the member states themselves who have made no efforts to harmonise their corporate tax bases. We need transparency on national tax rulings as well as harmonised tax bases."

Gianni Pittella, president of the S&D group, said: "Tax avoidance is a world phenomenon and the biggest shame is that it is not even illegal. Therefore the law has to be changed." He proposed three measures: a clear definition of tax havens, severe penalties for offenders and country-by-country tax reporting.

The ECR's Kay Swinburne, from the UK; also called for further action, especially against aggressive tax avoidance and underlined the need for global country-by-country reporting on national tax rulings. "This is long overdue," she said. Parliament should await the outcome of the Commission's investigation before judging, she added.

ALDE President Guy Verhofstadt said the investigation by the Commission must be completed by the end of the year and should also tackle the problem of tax evasion in general. He called for the Parliament to set up a special investigative committee and asked other groups to support it. "This is also a clear case where we need more Europe - to set up common tax compliance legislation and a convergence code not general harmonisation, because we don't know at what level to harmonise," he said.

Gabriele Zimmer, president of the GUE/NGL group, asked Juncker to explain his actions as the former prime minister of Luxembourg and why he offered companies the opportunity to avoid tax in his country, thus limiting the funds available to fight poverty and job creation.

Philippe Lamberts, of the Greens/EFA group, said it was high time to stop waging tax wars in Europe. "The ones who benefit are the multinational companies and the very wealthy, whereas the victim is European public finance, hence EU citizens." He also asked the Commission to broaden the scope of the investigation.

EFDD member Paul Nuttall, from the UK; said: "Mr Juncker, when you were campaigning during the European elections, you stood on a platform of fighting tax evasion by multinationals, but indeed you allowed that tax evasion in Luxembourg. Citizens are sceptical, because you want them to 'do as I say, not as I do'. You have only two options: either to resign or to stand down while the investigation takes place."

Bruno Gollnisch said tax harmonisation is not needed but that there is a need to make multinationals pay tax in the countries where they make profits. He also voiced concerns about Commission officials, led by Juncker, being responsible for the inquiry.