Under the spotlight: Juncker answers critics on Luxleaks tax evasion schemes

13 Nov 2014

This week, under pressure from the media, the European Commission President Jean-Claude Juncker finally spoke to the media and faced MEPs in Brussels on questions over a conflict of interest between the Commission investigations into the tax systems employed in some Member States.

Under the spotlight: Juncker answers critics on Luxleaks tax evasion schemes

What was clear from Juncker’s statements is a lack of any admission of guilt on his part, despite being Prime Minister of Luxembourg during the time when deals were made between multinational companies and the Luxemburgish tax authorities. As long as the deals were not discriminatory, with investors being treated in the same way, tax evasion of this sort is compliant with national legislation and international rules which apply.

Nor does the Commission President see any conflict of interest when the Commission is the body to launch investigations into the issues. Throughout the day, Mr Juncker repeated “I do not know why it is being seen as Juncker versus Juncker”. His defence follows the line of argumentation that the Commission is composed of representatives from all member states therefore any investigation into any country could be a potential conflict of interest.

Luxembourg, according to the President, has always pushed for more tax harmonisation in the past, in particular when it chaired Council meetings during its Presidency.

The Juncker Commission, due to publish its work programme on December 16, took the opportunity to preview some proposals in the field of tax. In favour of greater fiscal transparency, the Commission will submit a proposal for a directive on the automatic exchange information concerning tax rulings to be led by French Commissioner Pierre Moscovici.

The President will also push for the international financial community to adopt a similar approach in the Brisbane G20 summit this weekend.

While the proposals, if implemented successfully by all 28 member states, will go far in creating a more transparent and open system of tax in Europe, some difficulties remain with Mr Juncker’s position. The fact remains that during his time as Prime Minister, Mr Juncker also presided over the Eurogroup which saw harsh austerity measures imposed on many of Europe’s citizens. These in many cases translated into higher taxes. As one journalist asked, is this really in the spirit of Europe?