Juncker faces calls to resign following claims he secretly blocked EU tax rules

Written by Martin Banks on 6 January 2017 in News
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Leaked documents reveal EU Commission chief secretly blocked EU efforts to tackle tax avoidance by multinational companies during his time as Luxembourg's Prime Minister.

Jean-Claude Juncker at the podium

Jean-Claude Juncker | Photo credit: European Commission audiovisual


Revelations that Jean-Claude Juncker spent years "secretly blocking" EU efforts to tackle tax avoidance by multinational corporations during his tenure as Luxembourg's Prime Minister and minister of finance have led to calls for the Commission chief to stand down.

These come in recently leaked documents revealed by the international consortium of investigative journalists and the German radio group NDR.

The cables are said to reveal how a small handful of countries have used their seats on the code of conduct group on business taxation to frustrate concerted EU action and protect their own tax regimes. 


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Efforts by a majority of member states to curb aggressive tax planning and to rein in predatory tax policies were "regularly delayed, diluted or derailed by the actions of a few of the EU's smallest members, frequently led by Luxembourg", according to the leaked papers.

The code of conduct group was set up almost 19 years ago to prevent member states from being played off against one another by increasingly powerful multinational businesses, eager to shift profits across borders and avoid tax.

The leaked papers are said to be highly embarrassing for Juncker, who served as Luxembourg's Prime Minister from 1995 until the end of 2013. During that period he also acted as finance and treasury minister, taking a close interest in tax policy.

Despite having a population of just 560,000, Luxembourg was able to resist widely supported EU tax reforms, its dissenting voice often backed only by that of the Netherlands.

The papers were carefully analysed by GUE/NGL group MEP Fabio De Masi and Greens/EFA group MEP Sven Giegold. 

De Masi, a Vice-Chair of Parliament's committee of inquiry into money laundering, tax avoidance and tax evasion (PANA) in Parliament, said the years' worth of confidential German diplomatic cables provide a candid account of Luxembourg's "obstructive manoeuvres" inside one of Brussels' most secretive committees.

He said, "Juncker should make a new year's resolution for the sake of Europe: he must step down."

The German MEP condemned Juncker's central role in the affair as revealed in the documents, saying, "The Juncker leaks show once again that the Commission President hindered progress in the fight against tax deals of big corporations in the EU."

He added, "Juncker is part of the problem and not the solution. It's absurd that millions of Europeans who have suffered from austerity policies that created social division now have the godfather of tax dumping presiding over the Commission.

"Member states lose hundreds of billions each year in their budgets due to these tax deals. This money is needed for massive public investments."

Parliament's GUE/NGL group said it will be requesting a plenary debate on the Juncker leaks and De Masi is pushing for the Commission President to be invited for questioning at the PANA committee.

"The Commission must free itself from the dark shadow of Juncker. It must help end tax competition instead of lowering real taxes for corporations through full transparency in the country-by-country reporting and a reform of the common consolidated corporate tax base (CCCTB)," he added.

A Commission source said it was not for the executive to respond to questions about negotiating positions Luxembourg had taken, or about the country's past tax policies.

 

About the author

Martin Banks is a senior reporter for the Parliament Magazine

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