It’s a very embarrassing position for Juncker, because he only took office as the president of the European Commission a few days ago, and he’ll take some perhaps well-deserved political heat for the matter, and it probably reduces his credibility on tax reform matters.
Everyone has, in the back of their minds, the example of the Santer Commission, which resigned en masse in 1999 over corruption. For now, the revelations do not appear to implicate Juncker in anything more than the kind of aggressive steps that state leaders sometimes take to attract foreign development and investment. If, for example, Juncker was found to have taken personal kickbacks in exchange for favorable treatment, it would be a much more serious allegation for himself, for the Commission, and for confidence in Luxembourg’s institutions. But there’s no evidence of that.
Meanwhile, the Commission is a professional regulatory body, and any investigations into Amazon or other companies that received state aid in potential violation of European law will be conducted by Denmark’s Margrethe Vestager, the EU commissioner for competition, who is a former minister of economic affairs and deputy prime minister. It’s helpful, from an ideological perspective, that Vestager comes from the Danish Social Liberal Party, which should give some comfort to the European Parliament’s leftists. Ultimately, this is less a ‘scandal’ than a valid policy issue, insofar as Luxembourg and other countries have long pushed the envelope in making their jurisdictions extremely favorable to international companies. Note the Irish government’s decision last month to revise the ‘double Irish’ structure so common in the taxation of intellectual property assets. So as the Commission and other EU (and even international) institutions look into these decisions, it will help clarify the line between permissible and impermissible in the future.
Marine Le Pen is hardly the best critic on the matter, because her party has long been in favor of lowering taxes and promoting the kind of economic nationalist steps that Luxembourg’s officials may have taken with many international companies. Her call for Juncker’s resignation isn’t credible, but it’s very important for her to maximize support among the eurosceptic French right if she’s going to have any credible shot at winning the French presidency in 2017, a task made much more difficult by the return of former president Nicolas Sarkozy.
I spoke with RIA Novosti earlier today about the revelations that Luxembourg’s government has been much more intimately involved in granting tax concessions to international companies.Those revelations come less than a week after former Luxembourgish prime minister Jean-Claude Juncker officially took office as president of the European Commission.Marine Le Pen, the leader of the far-right, eurosceptic Front national (National Front) has already called on him to resign.
My full remarks follow below: