By Tommy Hansen
COPENAGEN
Jean-Claude Juncker, the newly appointed European Commission President and former Prime Minister and Finance Minister of Luxembourg, is facing pressure just six weeks into his job after a wide-ranging investigation by journalists revealed the EU state helped giant corporations avoid paying tax.
The revelations on Thursday across European media outlets by the International Consortium of Investigative Journalists (ICIJ) highlighted cases involving big name corporations like Pepsi, IKEA and FedEx having secured secret deals with Luxembourg which saved them billions of dollars in global taxes.
Observers and politicians say the massive leak of internal documents from PricewaterhouseCoopers, one of the world's largest accounting firms, may evolve to threaten the position of the newly appointed EC president.
A spokesman for Gianni Pittella, leader of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, or S&D, told Anadolu Agency (AA): “As the new President of the European Commission, the credibility of Jean-Claude Juncker is on the line."
"He must show whose side he is on. Is he on the side of European citizens or corporate tax dodgers?" he said.
'Threat to Juncker'
The leaked documents also include hundreds of private tax rulings – sometimes known as “comfort letters” – that Luxembourg authorities have provided to corporations in order to reduce or eliminate taxable income and came on the day about 100,000 people demonstrated in the Belgian capital of Brussels against austerity measures imposed under "free market reforms".
Because of Juncker's political background in Luxembourg - where he has been both Prime Minister and Finance Ministers - the release of about 28,000 leaked tax agreements, returns and other sensitive papers may pose a threat to him as he worked his sixth day in his new position as European Commission President, observers said.
Concerns have been raised within the European Parliament and initiatives taken to address the matter at a political level.
Danish MEP Jeppe Kofod told AA Agency that Juncker now owed a "good explanation" to European citizens.
"This is a bomb under the new Juncker commission. We need clear guarantees from Juncker's side that he has not involved either himself or his country in wrongdoing. Or else, he is simply unfit as president, said Kofod.
'Deeply reprehensible'
“It now seems overwhelmingly clear that this is a case of deliberately and systematically cheating the rest of the EU member states for huge tax revenues. Revenues which should have gone to hospitals, welfare, education and job creation, but instead ended up in tax havens," he said.
"It is deeply reprehensible, and we must demand a thorough investigation into Jean-Claude Juncker's role in this whole circus," Kofod stated.
He said he had he posed a formal question to the EC asking for official guarantees that Jean-Claude Juncker had no personal knowledge or involvement in the deals.
Pittella's spokesman added: "“The Luxembourg leaks scandal unveiled today ... does not come as a surprise."
"Already in 2012, the S&D group commissioned an independent report which revealed that tax evasion and tax fraud are costing European governments and taxpayers €1 trillion ($1.25 trillion) a year," he said.
"He must take urgent and radical action to close Europe's tax loopholes and curb tax competition which threatens a race to the bottom in public services and an ever-growing tax burden on honest, taxpaying citizens," he added.
Leaked documents
Pittella added that the Socialists and Democrats Group would ask the European Commission to come to the European Parliament next week to explain the urgent action they intend to take in order to fight tax evasion and tax fraud.
The chairman of the German SPD-delegation in the European Parliament, Udo Bullmann, also demanded on Thursday a special debate in the EU-Parliament on the matter.
According to the ICIJ, the leaked documents reveal how hundreds of companies arranged specially-designed structures with the Luxembourg tax authorities from 2002 to 2010.
Companies such as vacuum cleaner firm Dyson and Danish television company TDC worked with the Luxembourg tax authorities on arrangements which resulted in billions of dollars' worth of savings for the companies and a similar loss of taxes in the respective countries where they were based.
The legal – but secret - deals featured complex financial structures designed to create drastic tax reductions.
The companies allegedly involved names such as Pepsi, Ikea, AIG, Amazon, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan, Deutsche Bank and FedEx.
Documents from buyout firms Blackstone and Carlyle were also listed.
The EU Commission has opened investigations against other companies using similar tax arrangements in Luxembourg.
www.aa.com.tr/en
