The special committee on tax rulings in the EU parliament needs more time to fully investigate the tax deals struck between member states and multinational companies. The demand comes just after the publication of an 18-year-old secret page that warned about tax rulings in Luxembourg and could mean trouble for Commission President Jean-Claude Juncker.
According to Sven Giegold, German Green member of the European Parliament (MEP), the special committee on tax rulings, TAXE, has not been able to do its job since it did not have access to important documents.
The committee has not been able to fully investigate the taxation policies of EU member states and the role of individual ministers, some of whom today have important positions within the EU. For instance, the current EU Commission President Jean-Claude Juncker, former prime minister and finance minister of Luxembourg, and the Eurogroup President Jeroen Dijsselbloem, former Dutch finance minister.
“We want to know who allowed the systems of aggressive tax avoidance and why the European Commission did not act against it,” Giegold told Euranet Plus. It would be especially interesting to know “what role politicians like Mr. Juncker or Mr. Dijsselbloem played in this matter,” Giegold added.
Not enough time to read all documents
The special TAXE committee was formed following the LuxLeaks revelations, which showed how multinational companies lowered their tax rates, in some cases under one percent, through special tax deals in Luxembourg.
The committee has asked for the minutes of the meetings of the member states working group on company taxation, which has existed since 1997.
The Commission first refused to hand them over, arguing they were confidential, but recently EU parliamentarians were offered restricted access to the requested documents. The papers are to be read in a specific room where MEPs are only allowed to enter without any recording device or pen and paper.
Given that the estimated number of pages amounts to around 1,000 and the mandate of the TAXE committee expires by the end of November, there is not enough time to go through all the information, Giegold claims.
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“We have a clear obligation to shed light on aggressive tax avoidance in Europe of large transnational corporations over the last 20 years,” Giegold said. “And we could not do that because access to key documents was not granted – neither by member states, nor by the council nor by the commission. Now we will get a certain level of access to key documents and this has to be included in the work of our committee.”
“The committee has gained extensive knowledge, but we are still missing a lot of information,” MEP Michael Theurer, a liberal member of the TAXE committee, writes on his webpage. Theurer, who is the author of the Parliament’s report, also calls for an extension of the mandate.
According to both Giegold and Theurer, the statements made by Juncker at committee meeting on September 17 “were unsatisfactory and he must be invited again.”
But it is not sure that the committee really will be able to go on working on the matter. On Monday, October 6, coordinators of the TAXE committee will meet to take a decision on the demand to extend the mandate. So far the Liberals, Greens and the United Left are in favour, while the conservative group of the European People’s Party (EPP) already announced its opposition.
The decisive position of the Socialist and Democrats is yet unknown.
The documents could reveal that Luxembourg and other countries did break EU rules by not sharing information on harmful tax competition with other EU member states.
MEPs who want to prolong the mandate are also pointing at a secret page that was excluded in a 18-year-old report from the former economy minister of Luxembourg, Jeannot Krecké, about tax rulings.
Juncker denied having seen secret page
The Commission president was asked about the so-called Krecké report in a hearing with the TAXE committee on September 17. Juncker replied that he did not know of any missing page.
But the author of the report, former Luxembourgish parliamentarian and minister, Jeannot Krecké, confirmed that he had indeed given the report, with the missing page, to Juncker.
“I handed the report to two people of the Luxembourgish government, one of them was Jean-Claude Juncker,” Krecké told Radio 100,7, Luxembourgish member of the Euranet Plus network. “Maybe he did not read it properly,” the former minister of economy added.
This week Juncker apologised for “the misunderstanding” in a letter to the German MEP Fabio de Masi, explaining that meanwhile he got the missing page from the author of the report.
“Since he has no objections to publishing the missing page of his report, I do not see any reason to keep it from you,” Juncker wrote and added the page to the letter.
But de Masi is not satisfied with the written excuse by the Commission president. He wants both Juncker and Krecké to come to the TAXE committee for another hearing. He asks them to explain the document which, according to de Masi, shows how the government of Luxembourg was warned that the country’s tax rulings could be legally doubtful.
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“I have to say it confirms one broad story. That is, the government of Luxembourg has been warned that there was a creative dialogue of the Luxembourgish tax authority with multinational companies. And this dialogue could be regarded as abusive, that is what Krecké wrote. He wrote it to Juncker, to the government, so the cheap excuse of Mr Juncker this has been an excessive practice by some bureaucrats and I have nothing to do with it, is not credible,” de Masi said in an interview with Euranet Plus.
It was not up to him to decide what to do with the report, Krecké told 100,7: “I had the mission from the prime minister to write a report and it was up to him to decide what to do with it,” Krecké said, adding that some “would maybe be disappointed” about the content, “that is not that extraordinary.”
The page does provide some information on the Luxembourgish policy on taxation, though. For instance, Krecké, who did not criticize tax rulings in his report, advises the finance minister, which was also Juncker, “to follow a little closer the agreements” between the tax authority and multinationals, since “once the political power is clearly aware of these practices, it could intervene if the applied rules would not be in line with the policy of the government.”
In another passage of the page, Krecké mentioned that the dialogue between the authorities and the taxpayer requires “that the authority gives up the traditionally negative attitude towards operations that are principally justified by fiscal advantages.”
Krecké: ‘Report could lead to trouble’
Asked why he decided to drop this page, Krecké explained that it could have caused some problems to the country’s position in the EU. (audio in Luxembourgish)
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“When I finished the report, I knew that this would be a problem not easy to explain. Luxembourg was about to take over the presidency of the EU and we were facing difficult negotiations [at EU level] on the taxation base as such. Therefore I decided to drop certain paragraphs, for instance one on tax rulings. It was my decision and not the one of Jean-Claude Juncker or anybody else,” Krecké told 100,7.
In November last year, Krecké had already told 100,7 what he wanted to say when he wrote the page which he later excluded from the report. (audio in Luxembourgish)
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“I just said that a government should follow up on what’s going on and ask whether this is still in line with the intended policy. This does not only apply to tax rulings. If you change taxation, if you increase or decrease taxes, you don’t know by a hundred percent what will be the effect of this policy. So you should always evaluate, did I achieve my goal, or did the measures not have the effect I wanted them to have or did they even have a perverted effect. I think if we [the Luxembourgish governments since 1990] must blame ourselves for something, than that we did not look close enough at the results of the reforms on taxation we implemented,” Krecké said.
- This article was produced with the support of Luxembourgish member of Euranet Plus, Radio 100,7
- Authors: Andreas Liljeheden, Danièle Weber, Euranet Plus News Agency
