The Greens-EFA Group in the European Parliament has succeeded in collecting the necessary signatures to trigger an inquiry following the Luxembourg Leaks tax avoidance scandal. The Parliamentary inquiry will investigate allegations of tax competition between member states.

Molly Scott Cato, Green member of the Parliament’s Tax Working Group, said: 

“Our ability to gain the support of 25% of the whole parliament makes it clear how seriously our colleagues take this issue. The revelations arising from the Luxembourg Leaks show serious breaches of the Treaty in that country, but the aim of our inquiry is to broaden the investigation so that we can explore how widely this illegal practice has spread.” 

The basis for the Green-EFA inquiry is the allegation that there have been contraventions of the European Treaty [1], which requires member states co-operate with each other. The leaks of information from PricewaterhouseCoopers in Luxembourg make it clear that, far from co-operating, member states have been actively engaged in competition to reduce their tax rates to attract investment from multinational corporations. The inquiry can also investigate whether there have been contraventions of obligations to provide all necessary documents to ensure fair competition within the single market.  Molly Scott Cato added: 

“This beggar-thy-neighbour approach to taxation policy within what is allegedly a single market works against the interests of our citizens and only benefits powerful multinational corporations. Our call is for tax justice: that the costs of funding the infrastructure of our societies should fall most heavily on those most able to contribute. As a result of decades of tax corruption and tax dumping the reverse has come to be the case.” 

Since securing the necessary number of signatures for an inquiry, the President of the Parliament and the political group leaders have discussed the proposal but postponed it pending an investigation into the legal basis for the examination. A draft mandate will now be discussed on the 5th February, when it is expected to be adopted during a plenary session of the Parliament. Despite a majority of MEPs not supporting an inquiry, the main groups in the Parliament have indicated they will not block it from taking place [2].

Notes:

[1] Contravention is of Article 107(1) of the European Treaty, which requires that member states co-operate with each other; and Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 108 TFEU, regarding the obligation to cooperate and provide all necessary documents. 

[2] More details: http://www.sven-giegold.de/2015/luxleaks-inquiry-on-hold-in-conference-of-presidents/

 

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