The fight for tax justice suffered a setback today as a Grand Coalition of EPP* and S&D* reared its ugly head and joined forces to defeat a parliamentary vote that would have enhanced measures against tax avoidance and protections for whistleblowers.

Back in October, a progressive majority including GUE/NGL fought to include texts and provisions at the Parliament’s Special Inquiry Committee into Money Laundering, Tax Avoidance and Evasion (PANA) to be put to the vote in December.

However, at the eleventh hour, the S&D reneged on the agreement and voted to abstain on a number of progressive paragraphs in order to keep their Grand Coalition partners happy.

The likes of the EPP and ALDE* group had long wanted to keep directives that tackle tax avoidance off the agenda. Prior to the vote, there had been concerns that the two blocs would water down or even delete progressive content from the final report.

Also defeated were efforts to set up an EU-wide body that would give whistleblowers a platform to anonymously report financial crimes. This was based on the report by GUE/NGL’s Dennis De Jong which had passed a plenary vote back in February.

There was better news, however, with sanctions being proposed on enablers and facilitators such as banks, lawyers and other intermediaries which help with aggressive tax planning, tax fraud and evasion.

A future permanent committee enquiry into tax evasion – thanks in part to the recently-leaked ‘Paradise Papers’ – will also be set up along the lines of the US Congress model.

The measures were among 211 recommendations put before MEPs today but the vote left GUE/NGL shadow on this ‘Panama Papers’ report, Miguel Urbán, angry and disgusted.

The Spanish MEP abstained in the final vote and afterwards, he voiced his frustration at what the Grand Coalition has done – pinning the blame firmly on the S&D:

“The Grand Coalition has voted in favour of the report after making sure that it had been modified and even stripped of its most progressive, advanced elements. The EPP and ALDE have dropped entire paragraphs from the text that had previously been approved in the ‘Panama Papers’ committee. But they would not have succeeded without the help of the S&D which chose to abstain. That effectively ended the Parliament’s position in exerting pressure on the Council and the Commission to tackle tax injustice.”

“EPP and ALDE have got what they wanted – mutilating the text and devaluing the recommendations of the ‘Panama Papers’ committee. Ultimately, our group could not endorse it and we therefore abstained.”

“I had met with the S&D group just yesterday and I told them which key elements of the text would be our red lines. But in the end, they chose the Grand Coalition over the fight against tax evasion and avoidance,” he continued.

The Spanish MEP added that such positions taken by EPP and ALDE groups came as no surprise to him:

“Since the start, the ultimate aim for the EPP and ALDE in the Panama Papers inquiry committee has been to stop any attempts to tackle tax avoidance which has bled the country’s public finances dry.

“They ganged up to defeat the recommendation for tax harmonisation which would have eliminated competition between member states and tax dumping. They also scuppered any measures aimed at combating tax avoidance by multinationals – one of the key problems as identified by the ‘Paradise Papers’.”

“They also got their way in voting down the European registry which would have exposed companies that hide behind letter-boxes in tax havens, and the creation of an independent body for the protection of the whistleblowers,” he concluded.

Despite these setbacks, a vote to set up a permanent committee of inquiry was passed. Matt Carthy comments:

“Over the past year of our work on the ‘Panama Papers’ inquiry committee, one thing has been made clear above all else – the fraud, tax avoidance, tax evasion and money-laundering uncovered by the leak are systematic problems, including in the EU.”

“It is ironic, but not surprising, that just as we are finishing our work on the ‘Panama Papers’ inquiry, we are faced with a new and even bigger offshore leak – the ‘Paradise Papers’.”

“I welcome today’s vote in favour of establishing a new special committee to examine the revelations in the Paradise Paper, to continue examining these same issues. I also welcome the vote calling for the establishment of a permanent committee of inquiry to be established in the next term of the Parliament,” he said.

*EPP = European People’s Party ; S&D = Socialists and Democrats; ALDE = Alliance of Liberals and Democrats

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