Wednesday

5th Aug 2020

EP debate flares up on extending tax probe

An internal debate at the European Parliament on whether to extend a probe on unfair tax rulings is likely to be decided next week.

A lack of access to documents and a total lack of cooperation from some member states [Bulgaria, Denmark, Slovenia] as well as numerous multinationals have obstructed the probe.

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The special committee on tax was set up after the LuxLeaks scandal, which exposed how Luxembourg allowed big firms to scam the public out of hundreds of billions in taxes.

The committee’s mandate will end in November and a critical draft report has already been issued.

The draft requests the European Commission, among other things, to make use of an obscure EU treaty article [116] to undermine the unanimity rule whenever decisions are made in the area of tax policy.

An internal debate on extending the probe will take place next week in Strasbourg.

But the issue is already exposing rifts between the smaller political groups on the left and the much larger centre-right EPP and centre-left Socialists.

Some MEPs in the committee are saying the work is not yet done and that they want to work beyond the November deadline.

Others, such as the centre-right EPP unofficially oppose an extension, while others such as the centre-left Socialists and liberals ALDE remain ambivalent.

Why is more time needed?

Sven Giegold, a German Green MEP, told reporters on Thursday (1 October) that the draft report is missing a chapter on how member states helped corporate tax avoidance over the past 25 years.

He said the “committee was structurally obstructed to do this part of its job” because the Council, representing member states, has refused to hand over paper work.

The documents are needed to assess which member states blocked greater transparency on tax rulings. They also reveal how they worked against the European Commission on the matter.

The European Commission has the information but it also refused to deliver.

In August, EU commissioner for economy, Pierre Moscovici, in a letter to the committee said the Commission is bound by confidentiality rules.

Moscovici has since relented and offered to grant limited access to a 1,000-page document.

A select group of MEPs will be able to skim through it in a closed room but won’t be able to take any notes.

“It is impossible to work on these documents, so therefore, this offer of Moscovici, will not end the obstruction of the work of the committee”, said Giegold.

Giegold, for his part, said he has since obtained German minutes on tax avoidance debates from a code of conduct working group on business taxation. But the minutes end in 2006. The remaining nine years remain a mystery.

The positions

German liberal Michael Theurer who helped draft the report, also wants an extension.

If they fail, Giegold will pursue setting up a more powerful inquiry committee and has threatened to expose every MEP who opposes it.

But their efforts will be hard pressed. A contact at the European parliament said few are interested.

“This is something that comes from the Greens and they will be overruled”, said the contact.

Theurer’s office said the EPP have already unofficially announced they are against it after receiving an email from the centre-right German coordinator for the committee, Burkhard Balz.

Balz’s office said nothing was decided.

Asked about the email to Theurer, Balz’s office said it is “something not made available to the public”.

The committee’s chair, French centre-right Alain Lamassoure, for his part, has not taken an official position either.

“It is up to the political groups to decide”, said his office.

Portuguese socialist Elisa Ferreira, who also helped draft the report with Theurer, said she is in favour of continuing the work started in the committee.

Asked if this means she backs an extension, her office said the “format is not yet clear.”

Member states stonewall EP tax probe

EU member states are refusing to hand over documents to help the European Parliament's probe into tax abuse by multi-national corporations.

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EU member states agreed this week to exchange information on tax rulings but not to make it public. A basic measure of transparency would allow an informed public debate on tax policy.

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