Monday

4th Jul 2022

EUobserved

Juncker: 'It's not 'my' problem, it's 'our' problem'

  • Juncker (r) hid from press for a week, before voicing 'regret' (Photo: European Commission)

A level teaspoon of grudging credit where grudging credit is due.

After completely fluffing his response to the LuxLeaks last week (i.e. by disappearing), the erstwhile Grand Duchy PM evidently realised that a G20 meeting 1,000s of kilometres away, on the taboo topic itself, would not be the most politic way of breaking his silence.

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So he traipsed down to the press room on Wednesday, six days after the revelations about Luxembourg's elaborate corporate tax avoidance schemes, and two days before occupying an international stage on the matter, and was regretful.

He did the only thing that could be done in a situation where he was not the architect, had no influence over the tax authorities, but might have been politically responsible anyway - he made it everybody else's 'issue' too.

It was a tour de force in what might be called shifting the emphasis. A laconic resetting of the camera lens to take the zoom focus off Luxembourg and pan out to the rest of EU.

If only, he said, in the manner of one wishing that it might rain less in Belgium, we could just all agree on the common corporate tax base. Then many of these "problems" might disappear.

Expanding on the poacher-turned-gamekeeper mode, the two-weeks-in-office European Commission president, said more transparency was in the offing.

There would soon be a proposal that would oblige member states to automatically tell one another about when they were going to offer companies the opportunity to pay virtually no tax, or, in the new term we've all just learned, give them "comfort letters".

He said the same to MEPs - who, by and large, weren't out to make life difficult for him - a few hours later. He also included a dig at a freewheeling Guy Verhofstaft, who was busy gesticulating about the inequities of tax evasion.

Sharing a moment of Beneluxish understanding, the Luxembourger reminded the Belgian MEP - also a PM in his former life - that the country he knows best is not exactly a paragon of virtue when it comes to corporate tax.

So there it stands.

We are now back to square one. Or, it might be said, square 2011, when the European Commission first proposed the common corporate tax base.

The initiative has remained ‘stuck’ ever since, as thoroughly disliked now as it was way back then.

Nevertheless, the commission is now going to breathe life back into the proposal. It is going re-shape it.

After that, who knows. The decision to go further belongs to the member states, noted Juncker's spokesperson: "Let's see who follow and who blocks".

Juncker is now the “protagonist” in the fight against tax evasion.

So who's the baddie now?

Of course neither common tax base nor the transparency proposal will make it on to the EU statute books in any meaningful form – there are vetoes to be had in this area of law-making.

But lucky Juncker.

From the man who once said he would fight a proposed EU law on changing VAT rules, and who resisted a proposed savings directive until the very end, he finds himself out of national office when the political winds apparently really have changed.

Just because it’s legal does not mean it was morally right is the new (stated) philosophy.

And now all that remains to be seen is whether what went on really was legal. All those tax breaks - did they breach EU rules?

The commission has just said the Dutch sweetheart deal with Starbucks may amount to illegal state aid.

For now, Juncker has managed to deflect the focus with the argument that everyone else is doing it too.

But his position remains awkward.

The spotlight will turn right back onto him should his own commission find that the Grand Duchy also broke the rules.

If it says the Duchy didn't break the rules, there will be lingering questions as to why.

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