Jean-Claude Juncker: architect and godfather of one of Europe’s biggest tax cartels – with a patchy memory

As a result of GUE/NGL’s initiative, the President of the European Commission Jean-Claude Juncker has appeared before the European Parliament’s Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) today. Ever since the Lux Leaks scandal in 2014, Juncker’s infamous part in turning the Grand Duchy into a notorious tax haven is well known. Yet, up to this date, Juncker wants to wash his hands of and claims never to have negotiated any tax deals with multinationals. This has always been the task of the tax administration, according to Juncker.

Also in today’s hearing, Mr Juncker would not back down from this position. When GUE/NGL MEP Fabio De Masi asked him about his meetings with senior tax officials from Amazon back in September 2003, Juncker casually replied that of course he had met with company representatives to discuss investment decisions in Luxembourg, but that he had never been involved in any of the specifics of tax deals with companies. This had always been managed by the tax administration directly. Juncker also thanked De Masi for bringing back to his memory what he had done in September 2003. It happened quite often during the meeting that the Commission President excused his non-answers with his patchy memory of the past.

Juncker brushed aside questions about his doings as the Finance and Prime Minster of Luxembourg as things of the past in a world that was totally different to the one we are living in now. What mattered, according to Juncker, is the future. And here Juncker pointed to the many proposals the Commission has put forward recently to curb harmful tax practices. He counted twelve they have put forward so far with a 13th in the pipeline and ready to be released in a few weeks time. Two initiatives Juncker repeatedly referred to were the tax haven black list and the Commission proposal for a Common (Consolidated) Corporate Tax Base. We have blogged about both proposals and explain here and here why they lack teeth and will not solve the core problems. Also the money laundering black list, which is part of the anti-money laundering directive, is a farce and has been rejected by Parliament twice (click here for a short background piece on the list).

The overarching problem with the Commission’s approach, however, is that while aiming to close certain loopholes, it pushes to intensify destructive tax competition within the Union. Juncker himself said that what he wants is “fair tax competition”. The end result of this would be that in a few years time Google, Apple, Amazon and co don’t have to worry about whether to shift their profits to Ireland or Luxembourg, as the effective corporate tax rate in all of the EU will be close to nothing.

A further delicate point raised by De Masi concerned an alleged visit of Luxembourg’s ambassador to the Portuguese island of Madeira in January 2012. Three weeks ago, the PANA Committee was told by Rui Gonçalves, finance secretary of Madeira (we wrote about this hearing here and also have an article on Madeira here), that Luxembourg’s ambassador came to Madeira on a shopping tour, trying to lure businesses to move to Luxembourg with sweet tax deals. Juncker, who was still Prime Minister at that time, replied that ambassadors have to answer to the minister of foreign affairs and that he has a hard time imagining that Mr Asselborn, Luxembourg’s long standing foreign minister, would ask his ambassadors to do such a thing. We find it even more difficult to believe that the ambassador would come up with this idea by himself. Luckily for us, our colleagues from déi Lénk in Luxembourg have handed in a parliamentary question on this topic (which you can read here). We expect an answer by the end of June. A positive reply would just be another stone in the mosaic that shows how Juncker turned tax dumping into Luxembourg’s raison d’etat.

The ease with which Juncker could sidestep most of the question put to him once again openly displayed the weaknesses of inquiry committees in the European Parliament. With only one five minute slot for questions and answers per parliamentarian, the invitees are going for an easy ride.

Here you can watch Fabio’s questions to Juncker:

To rewatch the entire session, click here.