EU parliament studies tax avoidance in member states

(AFP) The European parliament ordered reports delving into tax evasion Thursday, a contentious topic after the “Luxleaks” scandal that has embroiled EU commission head and former Luxembourg premier Jean-Claude Juncker.

A journalistic investigation using thousands of leaked files revealed last month that Luxembourg allowed hundreds of top companies to enjoy tax breaks while Juncker was prime minister.

Juncker last week easily survived a no confidence vote on the issue in the European Parliament but public anger over the deals has put MEPs under pressure to do more.

“Upon request of the ALDE group, the European Parliament will inquire into tax evasion and tax fraud in Europe,” a statement from the parliament’s liberal group said.

With the move, parliament will produce two reports, the first focusing on the tax affairs of member states and the other drawing up a proposal for new legislation to fight tax evasion.

“Tax evasion and tax avoidance are too easy in Europe. Now it is time to act and find a European solution,” said Guy Verhofstadt, head of the ALDE group, which is one of the three main groups in parliament along with Juncker’s EPP and the socialists.

But Green MEPs said drawing up reports was an “easy route” to attack tax evasion and urged a full fledged parliamentary inquiry.

“While we are happy to contribute to new initiative reports…, we are not convinced that simply producing more reports is commensurate to the issue at hand,” said the Greens’ Philippe Lamberts.

A full-fledged inquiry would give MEPs fuller power to “investigate breaches of EU law by member states” and establish whether the Commission “acted in accordance with its duties under the EU treaties”, the Greens added.

But Socialist group head Gianni Pittella said the scope of a full inquiry “would only have been able to look at past law-breaking or maladministration.”

“We look to the future and say: Never, never again LuxLeaks, in any member state,” Pittella added.

Juncker, who was prime minister of Luxembourg for 19 years, was approved as commission head last summer, backed by his right-of-centre EPP, the socialists and Liberals.

In an interview last week, Juncker said Luxembourg had “no choice” but to make the controversial tax deals, in order to diversify the economy.