(MENAFN- Kuwait News Agency (KUNA)) The new EU Commission President Jean-Claude Juncker was hardly one week in office when he faced a full blown tax avoidance scandal in his native country Luxembourg during his premiership.
Dubbed by the western media as "Lux Leaks," the scandal refers to an investigation by International Consortium of Investigative Journalists of 28,000 leaked documents that accused Luxembourg of making secret deals with hundreds of big multinational companies which reportedly channelled hundreds of billions of euro through Luxembourg and saved billions of euros in taxes.
Juncker was the prime minister of Luxembourg for 18 years from 1995 and also the finance minister for many years.
His silence for a week on the affair fuelled comments in the European media and political circles questioning his credibility to run the EU's executive body.
Sven Giegold, a German Member of the European Parliament and the spokesman for economic and financial affairs of the Greens party, said "these revelations are a major blow to the credibility of new Commission president Juncker and his capacity to act for public interest." The Portuguese newspaper Di rio Economico even went to the extreme to write that "Juncker's only way out of the tax affair is resignation." "Of course it's understandable that businesses looking for tax breaks turned to Luxembourg. But it is completely unacceptable that the EU allowed this artificial tax system," the paper commented.
Juncker appeared after a week before the press and separately before the European Parliament in Brussels on Wednesday 12 November to rebuff the accusations against him saying the leaks did not reveal anything illegal.
"If the tax rulings, which were legal, led to a situation of non-taxation, I regret it," he told a press conference.
Juncker, however, admitted that he was "politically responsible" for tax policy, but insisted that Luxembourg tax authorities acted independently of the government.
"There probably was a certain amount of tax avoidance in Luxembourg, as in other EU countries. We find this everywhere in Europe, because there is insufficient tax harmonisation in Europe," he asserted.
Juncker announced that the EU Commission will investigate the leaks. The leader of the Liberals in the European Parliament, Guy Verhofstadt, called for the investigation to be completed by the next December.
He also demanded that a special committee to be set up in the EU Parliament to investigate the leaks.
However, some commentators also suggest that Juncker is the right man for cleaning up the tax break affair.
The Austrian newspaper Wiener Zeitung wrote that when the multinational company Ikea gets away with paying just 48,000 euros in corporate tax on 2.5 billion euros of profit, "it's plain for all that this is no way to maintain a European social model." "Juncker is now EU Commission president, so it's up to him to put an end to this. Putting the fox in charge of the henhouse can be a valid strategy. Because at least Juncker has detailed knowledge of how tax evasion works. If anyone can crack down on it effectively, it's him," it commented.
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