Press Releases S&D Group: Pandora Papers: conservatives trying to sweep tax abuse of their own politicians under carpet

S&D Group: Pandora Papers: conservatives trying to sweep tax abuse of their own politicians under carpet

The European Parliament will today adopt an ambitious resolution on the Pandora Papers, which has S&D fingerprints all over it.  The Socialists and Democrats have been leading the fight against tax abuse in the European Parliament, and today reiterated their call for abandoning unanimity in the Council on tax matters, reform of the Code of Conduct on business taxation, tougher criteria for tax havens and robust sanctions, as well as increased transparency to tackle financial crime and tax avoidance more effectively. The EPP voted against our proposal exposing high-ranking politicians from their political family involved in the tax scandal.

Jonás Fernandez, S&D MEP and responsible for economic and monetary affairs, said:

“I was shocked to see that the conservatives are trying to sweep the tax abuse of their own politicians under the carpet.  The Pandora Papers have once again exposed a broken tax system, where some politicians, big corporations and rich individuals get away with exploiting legal loopholes, shopping around for the lowest tax rates and hiding money in tax havens. These dodgy practices worsen existing inequalities and drain the public purse. Up to one trillion euros is lost every year due to tax fraud and tax evasion EU-wide. The Pandora Papers must be the final wake-up call for the EU to get serious about cracking down on tax abuse, and this includes naming and shaming the people, who are involved in tax abuse.

“We urge EU leaders to finally give the EU tax haven blacklist some teeth. The leaks shockingly illustrate the pivotal role tax havens still play in the hidden operations of the global shadow financial world. Yet, the blacklist remains a paper tiger because its criteria are broken and its governance remains opaque. This is why we propose to formalise the EU blacklist process.

“Up to now, the EU list is drawn up solely based on Council conclusions. Some of the world’s most notorious tax havens have never made it onto the list – for example Switzerland, Hong Kong and Jersey – and others were let off the hook – such as the Cayman Islands – even though they have led the race to the bottom by offering a zero tax rate. Only two weeks ago, Anguilla, Dominica and the Seychelles were also removed. The nine countries that are left mostly represent minor financial flows. In addition to including realistic and strict criteria for what constitutes a tax haven, such as a minimum effective tax rate and a minimum level of economic substance, we also must come up with tough sanctions for tax havens to ensure a deterrent effect.

“Now that the Pandora Papers have shed light on how some US states provide tax secrecy, it is very worrying that the USA is still not a member of the internationally agreed standard on the exchange of information, which is a blacklisting criterion. This must change and our resolution is clear.”

Paul Tang, S&D MEP and negotiator for the resolution in the civil liberties committee, said:

“To combat tax abuse by footballers, rock stars, models and heirs whose obscene wealth and tax dodging schemes are back in the news again, we must also hold their accomplices accountable. Better regulation and oversight is long overdue for the wealth managers, law firms, company formation agents and accountants that design and enact these complex schemes. They are the ones setting up shell companies in tax havens to shield wealth and assets from taxes they should payTheir impunity must end.

“The complex ownership structures of the hidden financial system of tax avoiders, tax evaders and money-launderers prosper on secrecy. That is why we call on all European politicians to disclose any links they have to shell companies. MEPs already need to disclose financial interests, others should do too. To know who really owns companies and trusts, and their dealings, we propose to increase public access to information concerning beneficial ownership of corporations and trusts. We have widely established this standard for EU companies, but now need to extend it to companies outside the EU. A shell company in the British Virgin Islands should not be able to purchase property in the EU without revealing its beneficial owner.“

Note to the editor:

The Pandora Papers, published by the International Consortium of Investigative Journalists (ICIJ) in early October, are an unprecedented massive data leak, unveiling the beneficial owners of corporate entities established in secrecy jurisdictions, among them more than 330 politicians and public officials from almost 100 countries, including 35 current or former heads of government.

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