TAX3 Hearing: Lack of transparency in the Council

On Tuesday 15 May  the TAX 3 committee held its third hearing. This time on the agenda was the current state of the measures against harmful tax practices within the EU and abroad, with  special attention given to the Blacklist (a list of countries that do not comply with the EU’s minimum requirements on just taxation) and the massive lack of transparency in the listing process. The European Ombudsman Emily O’Reilly had to respond to questions especially on the opaqueness regarding the work of the Code of Conduct Group (CoCG). Representatives of the CoCG itself, although invited,  were not present..

The lack of transparency around the the CoCG’s decision making process  was of great concern to MEPs. Many of the documents from the CoCG, as well as from other Council groups are not available to MEPs and if they are, they are often blackened. MEPs do not even have information on which member states block advances to list well known tax havens in the Council, as GUE/NGL MEP Martin Schirdewan pointed out. In her reply  Ms O’Reilly stated that this was due to massive lobbying activities.

All this is happening despite the fact that according to Regulation 1049 documents must be made available to the public, unless there be a specific reason for enhanced secrecy. This goes especially for legislative documents. The current situation, however is that most documents only get released after a request by the Ombudsman. In order for the Ombudsman to become active, a complaint has to be filed, meaning that neither the Ombudsman, nor MEPs can request documents that are crucial for their work on their own.

Next to the listing process, doubts on the overall effectiveness of the Blacklist were raised too.  Speaking in front of the committee, Oxfam representative Johan Langerock expressed his concerns that the Blacklist was actually a whitewash of countries not listed.  Moreover, by focussing only at the list, harmful tax practices that are not criteria for listing are disregarded. These shortcomings fuelled various questions on how to assure that the list would not be politicized. As GUE/NGL MEP Paloma Lopez convincingly stated the list itself as well as the process in which countries are listed are clearly political. Otherwise how could it be that a 0% corporate tax is not regarded as an indicator for harmful tax practices and countries well known as tax havens were not listed? Surprisingly the USA, not sharing any data with the European Union do not fall under the scope of harmful tax practices, while Namibia does. It is becoming more and more obvious that the greatest obstacle to finding effective measures to combat tax dumping is the lack of political will.