Thursday

26th May 2022

Juncker seeks to bypass vetoes on tax reform

  • Juncker told France's Liberation newspaper that he has been "weakened" by LuxLeaks (Photo: europarl.europa.eu)

European Commission president Jean-Claude Juncker has indicated he will try and get around member states’ veto powers over fiscal issues when he proposes new laws to clamp down on tax avoidance.

In an interview with the Frankfurter Allgemeine Zeitung, he said he may use a majority vote to get a forthcoming law on the automatic exchange of tax rulings (letters that give companies favourable tax conditions) passed.

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“I have not excluded that we change the rules using a qualified majority (of member states). I will leave the technical and legal aspects aside now but it would affect aspects of administrative cooperation,” he said.

When he initially presented the idea for the new law last month, he noted it would need unanimous agreement by governments – a requirement that essentially ensures the death of any given measure before it is even proposed.

He maintained a similar tax line just ahead of his commission's swearing-in ceremony, saying that fiscal harmonisation is an "absolute necessity".

He added that the issue should not be subject to the will of those trying to escape paying a tax high enough to respond to "minimum ethical and moral standards".

Juncker made the remarks after being buffeted by fresh revelations, published late on Tuesday, about the extent of Luxembourg’s tax avoidance scheme for multinationals – schemes set up while he was prime minister.

While initially keen to avoid talking to press about the first set of revelations, which came out a few days after he started his job, he has since been more forthcoming - speaking to a series of newspapers ahead of and around the 'LuxLeaks' publications.

The revelations have, by his own admission, “weakened” him.

But his job is not considered to be in danger, as the consensus in the European Parliament - mirrored by silence in the EU capitals - has been that it is more important to move on than to create an institutional crisis by topping the EU commission and its chief.

MEPs - who last month voted against a censure vote on Juncker and who decided not to launch an equiry into the matter - are keen to extract some legislative concessions, however.

Gianni Pitella, head of the centre-left Socialists, on Wednesday said dealing with tax fraud must be an "absolute priority" in the commission's work programme, due to be presented next week.

"If this is not done there will be no consensus or political trust from our group," he added.

And with support in the European Parliament so far clear, Juncker is maintaining a combative line in his interviews.

When asked by FAZ whether he would step down if the commission's competition department found that Luxembourg had breached EU state aid rules with its sweetheart deals for Amazon and Fiat Finance, he was dismissive.

"Has a government member ever stepped down because the EU has found state aid to be inadmissible?", he asked.

He noted that while he doesn't personally think his credibility has been damaged, his public image has "suffered".

He also questioned the timing of the revelations, telling journalists ahead of his oath-taking ceremony on Wednesday that the new leaks are "not coincidence".

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