EU parliament downgrades 'LuxLeaks' proposal

The leaders of the largest political groups in the European Parliament on Thursday (5 February) downgraded a proposal to set up an inquiry committee on tax avoidance and fraud by multinationals.

The original plan, put forward by the Greens and backed by over 190 MEPs in January, proposed setting up an inquiry to investigate tax rulings in member states.

The rulings - which, in the case of Luxembourg, were put in place while European Commission president Jean-Claude Juncker i was its prime minister and which came to be known as "LuxLeaks" - allow large firms to pay very little tax and in some cases less than one percent.

Party leaders in the EP’s “conference of presidents” met to discuss the merits of the proposal, which required their backing before it goes to vote in the plenary next week.

But the centre-right EPP group, centre-left Socialists, the liberal Alde faction, and the conservative ECR group opted for a weaker “special committee”.

The decision was based, in part, on a non-binding negative recommendation from the parliament’s legal services, which deemed the original proposal legally unsound.

"What is more important, this special committee will be in a position to propose legislative solutions," said Italian MEP Gianni Pittella i, leader of the centre-left socialist group.

Liberal group chief Guy Verhofstadt i said the special committee means "the parliament will be better able to enquire and propose solid solutions."

The Greens say a special committee is less obtrusive than an inquiry because it has no right to demand tax documents from national governments.

Access to the national documents are seen as crucial for investigators who want to hold finance ministers and others to account for rerouting billions of euros of tax revenue away from national coffers in times of economic crisis.

Belgian Green co-president Phillipe Lamberts accused the opposing party leaders of staging a coup.

“They had prepared their coup and their coup was a special committee,” he told reporters.

A draft technical note dated 30 January on the conference of president meeting already spoke of setting up a special committee.

“It may be an administrative lapse, but probably the person who wrote the technical notes had special prescient skills where they could, five days before the legal advice of the European parliament, come to the conclusion that the legal advice would conclude negatively,” he noted.

Lamberts said there is no legal or procedural obstacles that could not be resolved, noting that it is a matter of political will.

The Greens proposed a revised mandate to counter the points from the parliament’s legal services. But it too was shot down.

German Green economic and finance spokesperson Sven Giegold i described the conference of presidents’ procedure as an “assault on European democracy.”

Giegold said he was furious that a minority of MEPs was denied an enquiry by party leaders. The decision, he said, should have been taken at the plenary instead.

“We have less tools now with this special committee because we will not get the same visibility and we will not get the same access to documents,” said Giegold.

Giegold, along with German far-left MEP Fabio De Masi i, are now threatening to take the case to the Luxembourg-based European Court of Justice.

The plan is to challenge the conference of president decision on denying the inquiry at the top EU court.

The special committee will produce an own initiative report and a legislative report.

The enquiry report will examine the member state fiscal practices and the legislative report will table a proposal to the commission on tax evasion and tax avoidance.