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Juncker says no ‘best friend’ of big business after tax uproar

Published on 12/11/2014

European Commission head Jean-Claude Juncker said Wednesday he was no "best the friend of big business" following an uproar over huge tax breaks agreed with top global companies when he was Luxembourg premier.

Breaking his silence on the affair, an under-fire Juncker went on the counter-offensive by announcing the Commission, the EU executive arm, would “push for (tax) harmonisation and fair rules among all”.

Revealed last week, the tax breaks extended to household names such as Pepsi, IKEA and Deutsche Bank and are politically explosive at a time when cash-strapped EU governments have sharply cut budgets.

“Do not describe me as the best friend of big business, big business has much better friends in this house,” Juncker told lawmakers in the European Parliament, where he made a surprise appearance that triggered boos from far-right parties.

The appearance by Juncker followed a similar one in front of journalists and ended almost a week of stony silence since the shock revelations were published by newspapers worldwide, attracting calls for his resignation.

Juncker, a grizzled veteran of European politics, staunchly denied he was an “architect” of the “perfectly legal” system and had absolutely no “personal involvement” with any of the arrangements.

“I have said that the Commission would fight tax evasion and fiscal fraud,” Juncker said as he faced a barrage of journalists’ questions.

Juncker said the deals complied with EU and international rules, but with attitudes changing, he acknowledged the need for updated laws and more transparency.

– ‘No conflict of interest’ -Leaked documents made public by the US-based International Consortium of Investigative Journalists showed the tiny duchy of Luxembourg gave hundreds of global firms huge tax breaks.

The “Luxleaks” documents showed that billions were funnelled through Luxembourg thanks to complex financial structures that allowed companies to slash their tax liabilities, depriving hard-up governments of revenue.

The tax deal reports put Juncker, who only took office on November 1, immediately in the firing line given the European Union’s headline commitment to fighting tax fraud.

The Commission has already launched a series of investigations into tax arrangements in Ireland, the Netherlands and Luxembourg on the grounds they might infringe state aid rules by unfairly favouring some companies over others.

“There is no conflict of interest when the Commission launches probes” into such arrangements, Juncker said.

EU Competition Commissioner Margrethe Vestager has promised to press on with the probes and Juncker earlier said he would let the process take its course.

– Commission ‘supports’ Juncker -However, questions about his role in securing deals which are technically legal but go against the grain at a time of austerity and tax hikes for ordinary citizens, refuse to go away.

In his defense, Juncker said that as head of the Commission he could no longer comment on Luxembourg’s affairs or whether he remained the right person to lead the EU.

“I’m as suitable as you are,” Juncker replied to one journalist.

Some 22 of the 28 EU states had similar tax arrangements, he said, and the issue was to ensure that they did not violate state aid rules.

The commission chief appealed for parliament’s support.

“I need your confidence.

Without your confidence, nothing is possible,” Juncker said, triggering some boos.

At least one member of the European parliament called for Juncker to resign or at least stand down while his role in Luxembourg is investigated.

But Commission Vice President Frans Timmermans, whom Juncker calls his “right-hand” man, scotched any suggestions that his boss would step down.

Juncker defended his career against suggestions of impropriety, adding there “is nothing in my past” suggesting that he had encouraged tax evasion.

On the contrary, he said, “in the course of my life, I have sought greater tax harmonisation in Europe” so as to ensure a level playing field for all.

He announced the Commission would issue a directive soon on the automatic exchange of information on tax rulings, which allow companies to work out in advance how the authorities of a particular country will deal with them.

He said he has tasked economic commissioner Pierre Moscovici with drafting a proposal.

Australian Prime Minister Tony Abbott on Wednesday said leaders of the world’s most powerful economies should use this weekend’s G20 summit in Brisbane to close corporate tax loopholes that cost countries billions of dollars in revenue.