MEPs call for action on tax avoidance in Europe

Members of the European Parliament called for action on tax avoidance in Europe on Wednesday.

A report released earlier this month by the International Consortium of Investigative Journalists documented secret deals arranged with multinational corporations, enabling them to avoid paying tax in Luxembourg. Hundreds of major corporations like Pepsi, IKEA and FedEx had made arrangements that saved them billions of dollars on taxes in other jurisdictions.

Chairman of the Socialists and Democrats Gianni Pitella said that he “feels indignation for people hurt by big companies that don’t pay taxes in the countries where they earn profits.’’

”Tax avoidance is a world phenomenon and the biggest shame is that it is not even illegal; therefore the laws have to be changed,” Pitella said.

Kay Swinburne, member of the European Conservatives and Reformist Group, called for action against aggressive tax avoidance and emphasized the need for global country-by-country reporting on national tax rulings.

Manfred Weber, Chairman of the Christian Democrats, said EU member states have made no efforts to harmonize their corporate tax policies. ‘’We need transparency on national tax rulings as well as harmonized tax regulation,” he said.

European Commission President Jean-Claude Juncker was obliged to defend his actions when he was prime minister and finance minister of Luxembourg. Some MEPs accused Juncker of hypocrisy and called on him to account for his actions.

Juncker pointed out that the controversial tax rulings in Luxembourg were not illegal, although there was ‘’probably a certain amount’’ of tax avoidance in Luxembourg, as in many other EU member states.

”We find this everywhere in Europe because there is insufficient tax rule harmonization among the Member States,” Juncker insisted.

The tax controversy comes at a time when most of Europe is mired in recession, and many governments have declared policies of austerity.