Outside the EU institutions, the Brussels streets were empty after trade unions held a strike, protesting about austerity cuts.
Inside the European Commission, Jean-Claude Juncker’s spokesman, Margaritis Shinas was telling the press that the ‘Luxembourg Leaks’ – revealing that thousands of companies had been able to dramatically drop their tax commitments in Luxembourg was “a typical state aid case” and nothing to worry about.
Any questions over the role of Jean-Claude Juncker, the former Luxembourg Prime minister and Finance minister “was for the Luxembourg national authorities.”
A question from the press, “Does the Commission at least accept that there is a credibility issue here?” was entirely unanswered.
Certainly Juncker’s credibility seems to be at stake, not helped by a blithe and complacent performance from his spokesman, but this may provide an opportunity for Juncker to use the political outrage to help him achieve his stated aim of reforming taxation. “I agree tax evasion and tax havens must have no place in Europe,” Juncker has told MEPs.
The issue will be examined by the competition commissioner.
The political groups are calling for action. The Liberals demanded that the Commission “should come to the European Parliament immediately to explain if these practices are in accordance with EU law. It must be made clear, if the set up chosen by Luxembourg is legal or not."
Guy Verhofstadt MEP added, "We find it unacceptable that citizens and SMEs are expected to pay high taxes in this period of crisis, whilst many in the corporate sector seem to do everything they can to minimise taxes. If the reports are right, in many instances they are paying virtually none."
He demanded "Strong measures must be taken within the EU and beyond to ensure that tax avoidance and tax fraud is severely dealt with."
Martin Schulz, President of the European Parliament said that he was confident that the Commission would react if EU law had been breached and added, “What worries me most is the fact that the reported practices were manifestly legally possible in some countries. This reality means that we need to urge the Member States to work with us to end systematic tax evasion practices in Europe, be it in Luxemburg or any other country."
The Socialist group’s president, Gianni Pittella also demanded the Commission explain itself in parliament next week “to explain the urgent action they intend to take in order to fight tax evasion and tax fraud.”
Pittella added, “All European governments are struggling to cut their budget deficits. Many have had to slash public services and public investment, prolonging Europe's recession, and have raised taxes for ordinary citizens who cannot escape payment through the sweetheart deals offered to big business.”
The left leader concluded, “As the new president of the European Commission, the credibility of Jean-Claude Juncker is on the line. He must show whose side he is on. Is he on the side of European citizens or corporate tax dodgers? He must take urgent and radical action to close Europe's tax loopholes and curb tax competition which threatens a race to the bottom in public services and an ever-growing tax burden on honest, taxpaying citizens.”
There was further support from Juncker’s own group, the centre-right EPP.
“The EPP Group fully trusts and fully supports the European Commission in the ongoing investigation on schemes in Luxembourg and other Member States opened by Commissioner Almunia and which Competition Commissioner Vestager will now be taking over,” said Manfred Weber MEP, the Chairman of the EPP Group in the European Parliament.
“Fiscal policy remains a competence of the Member States. What we would like to see is national governments putting a stop to the use of dual language on the fight against tax evasion - expressing one view when they are in Brussels and another when they are back in their capitals - and agree on bold initiatives to put an end to these practices,” Weber concluded.
This could provide the momentum needed to push through reform and convince European citizens that the cost of austerity will not be met by them alone while many of the world’s most profitable companies can play tax regimes against each other in ‘a race to the bottom’ and avoiding paying tax.
The issue over tax deals is not confined to Luxembourg, with investigations involving deals in Ireland and the Netherlands also ongoing.
In addition, there are cases such as Malta, where a 35% tax is offset with a 30% rebate for many businesses. In short there is barely a single member state that does not have a real problem with tax arrangements for multi-national companies.
Jean-Claude Juncker has said he will deal with the issue and now he looks like having the momentum.
The first step would be to stop himself the Commission looking as complacent as it did at the midday briefing today.
http://www.neurope.eu/article/crisis-what-crisis-says-commission-after-tax-leak