European Parliament Votes to Form Committee on Tax Evasion

January 14, 2015

One quarter of the European Parliament voted to form a committee of inquiry on tax evasion today. The 188 MEPs met the threshold needed for the Parliament’s president, Martin Schulz, to start the committee.

Committees of inquiry are meant to investigate breaches or poor application of law in the EU. This committee will be tasked with investigating the tax agreements between Luxembourg and multinational corporations (MNC) recently exposed in the press as well as other cases of possible tax evasion. The vote to form the committee signals that MEPs do not trust President Juncker, who served as prime minister in Luxembourg, to investigate these tax agreements without bias.

The vote was pushed by Sven Giegold, the Greens’ economic and finance spokesperson. His first attempt to form the committee of inquiry failed in December, but he managed to expand his coalition to secure the votes for this second time around.

Sven Giegold is a strong proponent of limiting tax competition within Europe by harmonizing corporate income taxes. He has stated, “Aggressive tax competition by the Netherlands, Luxembourg, Ireland, Austria and others is a breach of the treaty obligation of sincere cooperation between member states.” He views the “Luxembourg leaks” as an opportunity to battle tax evasion and the committee as the means to do so.

Other MEPs are worried that an already weak European economy may suffer if there is uncertainty in the tax code for businesses. Although three-quarters of the Parliament did not vote for the committee of inquiry, few MEPs are willing to defend Luxembourg and the MNCs caught up in the debate.

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