Jean-Claude Juncker served for 19 years as prime minister of Luxembourg, and his country's tax system was very much one of those "national interests" that he so often complained about. Still, his reputation as "Mr. Euro" did not suffer as a result. The revelations, to be sure, are nothing new. Indeed, as a German minister said on the sidelines of one of last week's many events scheduled to commemorate the 25th anniversary of the fall of the Berlin Wall: "Everybody knew about it." The minister added that the Luxembourgian tax schemes were consistent with the legal framework, even if they managed to "artistically expand" that framework. "What is the big news?" That, though, is perhaps the wrong question. The correct one is: Should a politician representing his country's national interests be held to different standards than the European Commission president charged with upholding EU treaties? The answer is clearly "yes". And therein lies the political problem that is currently facing Jean-Claude Juncker. As the head of his country's government, Juncker -- who concurrently served as finance minister for several years -- helped develop Luxembourg into a tax paradise and blocked outside attempts to investigate its tax system. In 2004, after the Social Democrats joined Juncker as a coalition partner, the government agreed to establish a working group to compare the Luxembourgian tax code with international standards. But the working group never actually came to fruition. Even back in 1997, Juncker displayed certain alacrity when it came to defending his country's tax laws. At the time, he held the rotating presidency of the European Council as Luxembourg's prime minister. Under his stewardship, the EU passed a Code of Conduct for business taxation rules aimed at "tackling harmful tax competition in the European Union." The code, though, is not legally binding -- a fact for which Juncker is also largely responsible. The European Commission may only penalize country's tax system if the savings it offers to companies are determined to be forbidden state subsidies and thus contrary to EU free trade rules.
Access Investments-Building Awareness - European Union-ROMANIA
Friday, November 21, 2014
Jean-Claude Juncker served for 19 years as prime minister of Luxembourg, and his country's tax system was very much one of those "national interests" that he so often complained about. Still, his reputation as "Mr. Euro" did not suffer as a result. The revelations, to be sure, are nothing new. Indeed, as a German minister said on the sidelines of one of last week's many events scheduled to commemorate the 25th anniversary of the fall of the Berlin Wall: "Everybody knew about it." The minister added that the Luxembourgian tax schemes were consistent with the legal framework, even if they managed to "artistically expand" that framework. "What is the big news?" That, though, is perhaps the wrong question. The correct one is: Should a politician representing his country's national interests be held to different standards than the European Commission president charged with upholding EU treaties? The answer is clearly "yes". And therein lies the political problem that is currently facing Jean-Claude Juncker. As the head of his country's government, Juncker -- who concurrently served as finance minister for several years -- helped develop Luxembourg into a tax paradise and blocked outside attempts to investigate its tax system. In 2004, after the Social Democrats joined Juncker as a coalition partner, the government agreed to establish a working group to compare the Luxembourgian tax code with international standards. But the working group never actually came to fruition. Even back in 1997, Juncker displayed certain alacrity when it came to defending his country's tax laws. At the time, he held the rotating presidency of the European Council as Luxembourg's prime minister. Under his stewardship, the EU passed a Code of Conduct for business taxation rules aimed at "tackling harmful tax competition in the European Union." The code, though, is not legally binding -- a fact for which Juncker is also largely responsible. The European Commission may only penalize country's tax system if the savings it offers to companies are determined to be forbidden state subsidies and thus contrary to EU free trade rules.
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