Jean-Claude Juncker must address sweetheart tax deals he ignored in the past

Outlook: The Netherlands also plays the cynical game of attracting wealthy corporations by helping them to evade - oops, avoid - tax

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The Independent Online

Remember the debate about Jean-Claude Juncker’s nomination as President of the European Commission? He was characterised as an old-school federalist and backroom dealmaker who would frustrate Britain’s push for reform?

Just how badly all that missed the point is rapidly becoming clear. Luxembourg’s status as an onshore tax haven didn’t exactly go unnoticed during the hapless attempt by David Cameron to have him replaced by a moderately less objectionable federalist. But it was hardly at the forefront of the debate. It is now. And the reverberations from the reports that Luxembourg granted sweetheart deals to some 340 multinationals, allowing them to avoid billions of euros in tax during his tenure as Prime Minister, are getting ever louder.

The attempts by his aides to douse the flames have continued this week, but they’re proving about as effective as deploying a fire extinguisher to fight an Australian bushfire. Small wonder. At a time when the cupboards of so many European chancelleries are bare, it seems that the man their leaders appointed to head the European Commission spent years helping to keep it that way.

 

Of course, it’s not just Luxembourg. The Netherlands, another small, prosperous, nation, also plays the cynical game of attracting wealthy corporations by helping them to evade the taxmen of their fellow members. As does Ireland, which, despite it’s recent economic difficulties is still ranked as one of the wealthiest countries in the EU and the OECD.

Did I say evade? Sorry. That should be avoid. From a technical standpoint the former is illegal. The latter is not, although the dividing line between the two is sometimes a tad hazy. However, the net effect is the same. By indulging in the game of beggar thy neighbour these three deprive their fellow Europeans of revenues they desperately need. They have also played an important role in shifting the burden of tax from the corporate to the individual.

This needs to stop. It is not only Britain’s restive electorate that has been listening to the siren song of populist, nationalist and, yes, sometimes racist anti-EU parties.

One way in which the EU and it’s organs could demonstrate its value to populations that see it as a distant, meddlesome and out of touch, would be to stop big companies from ducking the tax that they have to pay.

There have, in recent times, been signs that the wind is changing on this front. Switzerland, part of the European single market but not the EU, has notably reaped the whirlwind. Its much cherished banking secrecy has all but evaporated, largely as a result of the US – and latterly the EU – finally calling time on their wealthy citizens’ illicit use of Switzerland’s banks to shelter their money from tax.

But what of wealthy corporations? Well, the EU has (finally) started to cast a jaundiced eye over the tax affairs of the aforementioned member states and some of their corporate clients. How those investigations will fare under Mr Juncker’s Commission is an open question.

“He should not be judged on the past,” opined Pierre Moscovici, the European Commissioner for economics, taxation and customs who will take the investigations forward. Well, Mr Moscovici, unless he starts answering some of the pertinent questions, how else are we to judge him?

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