Tuesday

14th Jul 2020

MEPs push for stronger tax probe, threaten court action

  • MEPs won't rule out going to the European Court of Justice to get a stronger committee on tax rulings (Photo: Alfonso Salgueiro)

A special European Parliament committee meant to examine tax breaks for multinationals is being stonewalled at every turn, prompting some MEPs to consider taking the legal route to get real powers.

Parliament president Martin Schulz is being blamed for the committee's weak mandate.

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Fabio de Masi, a German MEP from the United Left, told this website Schulz helped weaken the inquiry, tasked to look into how governments cut secret deals with companies to avoid paying taxes.

The committee, headed by French centre-right MEP Alain Lamassoure, launched its probe in February into tax rulings among the 28 member states following last year’s "LuxLeaks" revelations.

But De Masi said Schulz should have allowed a broader debate in the plenary on having a much stronger committee.

“Schulz never handed the decision on the mandate on the inquiry committee to the plenary, we think that this is a violation of our parliamentary rights and we are currently considering juridical steps and measures,” he noted.

He described the committee as “toothless”, saying it's unable to get the documents it needs to produce a report and subsequent legislative recommendations.

The Greens, for their part, had managed to gather enough signatures to formally ask for an inquiry committee into tax evasion but were outmaneuvered by some of the big party leaders, who opted for the weaker special committee.

“We regard the question of the inquiry committee as legally unsettled. So this means that the original demand has never been officially declined,” said German Green Sven Giegold.

He added that they will first try to “work constructively in the special committee” but won’t rule out forcing a formal decision on a broader investigation committee.

“If this is declined, it can be enforced through the courts,” he said.

Stonewalling

So far the committee has little to show for its efforts.

On Monday, they met Luxembourg’s finance minster as part of the second leg of their six-member state tour.

The Grand Duchy hit the headlines last year when an journalistic investigation exposed secret tax deals with some 340 multinationals.

De Masi said the Duchy continues to issue rulings and is also introducing a new measure, called a “fondation patrimoniale”, that will allow wealthy individuals from other member states to avoid paying inheritance tax.

“This is for example one measure they will now introduce and the only thing they said is that they will wait for a response from the commission whether this is line with the [EU] anti-money laundering directive,” he said.

The Luxembourg authorities refused to give the committee a list of rulings dating from 1991 plus other documents.

A meeting with Luxembourg’s Marius Kohl, who had rubberstamped some of the tax rulings, was also turned down.

On Wednesday, liberal German MEP Michael Theurer expressed his frustration at the lack of progress and the tight deadline.

“The question will be if the committee will have time to delve into the past, will it be able to go right to 1991, because our experience in Luxembourg shows just how difficult that is,” he told reporters in Strasbourg.

Aside from ministers in its six-member state tour, almost everyone appears to have ignored it. So far only Estonian, Latvian, Portuguese, and Polish ministers have agreed to meet the MEPs.

One parliament source close to the issue said Latvia’s minister, whose meeting is set for the end of May, has refused to speak in English.

“Concerning the documents, as far as I know we have only the documents from commissioner Vestager [the EU competition chief,], everything else we are still waiting,” said the contact.

The delegation from the committee will be visiting Switzerland next, then Ireland, the Netherlands, and the UK.

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