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EU’s Juncker takes political responsibility for Luxembourg tax deals

Frederick Florin, AFP | European Commission President Jean-Claude Juncker in October

The new European Commission president, Luxembourg’s Jean-Claude Juncker, took political responsibility for his country’s tax practices on Wednesday, saying he would fight tax evasion with more automatic exchange of information between countries.

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Juncker, 59, who was the tiny Grand Duchy’s finance minister or prime minister for 24 years until the end of last year, has avoided the media since a network of investigative journalists reported last week that Luxembourg had granted sweetheart deals to some 340 multinationals allowing them to avoid billions of euros in tax.

The revelations put him under intense pressure to make clear his position on the tax deals and raised questions about whether they create a conflict of interest for him as Commission chief.

“I am politically responsible for what happened in each and every corner and quarter (of Luxembourg),” he said, adding that while in line with Luxembourg and European laws, the tax practices may not have been ethical.

“It is true that sometimes when it comes to the application of different tax rules that are sometimes diametrically opposed that can lead to results that are not in line with ethical and moral standards that are generally applicable,” Juncker said.

He explained that tax authorities in Luxembourg were independent of the government, but took political responsibility for the policies, which he said were a result of different tax regimes in EU countries.

“I am not the architect of what you could call the Luxembourgish problem,” Juncker told reporters in a surprise appearance at a daily briefing of the European Commission.

“There is nothing in my past indicating that my ambition was to organise tax evasion in Europe,” he said.

The European Commission is investigating several tax schemes offered by Luxembourg to large multinational corporations to see if they broke EU laws on state aid.

“Everything that has been done has been in compliance with national legislation and international rules that apply in this matter,” Juncker said.

“This state of affairs is due to the fact that we have to deal with the outcome of different standards. If there is no tax harmonisation throughout Europe ... then this can be the result.”

He said that to prevent such situations in the future, the European Union needed to push on with a law on a common corporate tax base throughout the 28-nation bloc, something that has been long opposed by many countries. He would also push for automatic exchange of tax information between countries.

Juncker said the investigation would be conducted by Competition Commissioner Margrethe Vestager and he would not discuss the case with her to avoid being seen as trying to influence the outcome, which would harm his authority.

(REUTERS)

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