David Martin MEP

Labour Member of the European Parliament and one of the six MEPs representing Scotland in Brussels and Strasbourg

Taxing Issues

The Highland News, December2014

While citizens across Europe continue to see public services cut and living standards squeezed, tax fraud and evasion is costing member states €1 trillion a year. According to HMRC figures, in the UK alone, £9billion is lost every year. This could pay for the construction of more than 600 new schools or over 50 new hospitals or pay the annual salaries of over 330,000 police officers. Clearly we need legislation now and must no longer turn a blind eye to tax injustice.

Readers may be aware of allegations concerning the newly appointed European Commission President Jean-Claude Juncker’s relaxed approach to corporate tax dodging. These ‘Lux Leaks’, as they have been called, are revelations claiming that during his time as Prime Minister and Finance Minister of Luxembourg, he acted as a business partner who ‘helped solve problems’ for multinationals.

This was one of the reasons why Labour MEPs opposed him taking up his present post in the first place but we are cautious now about giving the Commission an ‘easy out’ of taking real and decisive action. Some of the measures proposed, such as the pointless gimmick of a Motion of Censure against Mr Juncker brought forward by UKIP – a party whose leader Nigel Farage has repeatedly come under fire for his tax arrangements, including the setting up of offshore accounts – will do nothing. This resolution would have done nothing to really tackle the problem.

A European Parliament Committee of Inquiry appears to be a good response, but such an Inquiry cannot look into issues of national law or taxation law and can only investigate breaches or poor application of EU law. It cannot compel countries to provide relevant and necessary information and can only look backwards at activity already taken place. A Committee of Inquiry will also not be able to look at the broader issue of tax havens or recommend immediate legislation to tackle the problem.
Mr Juncker still has questions to answer, both about his own conduct in the past and on how he will bring forward and enact the new measures that are being called for. People are rightly angry that legal loopholes and a lack of cooperation between governments means that some are not paying their fair share.

Labour MEPs have a long history of fighting against tax evasion and aggressive tax avoidance. It was our MEPs who led for the centre-left Socialists and Democrats Group in drafting last year’s European Parliament report calling for all multinational companies to be compelled to report what they earn, where they earn it and how much tax they pay as well as a common approach to tackling the use of tax havens and a blacklist of companies engaging in tax evasion.

The Commission must outline the urgent action it will take to fight tax fraud and evasion and David Cameron also must demonstrate his commitment to tax justice by ensuring the issue of tax havens is on the agenda of the next European Council summit in February.

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