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What LuxLeaks has confirmed is that, despite general discourse on cutting red tape and less regulation, it seems that big corporations are in fact in favour of state rules. However, the rules they want may not correspond with the laws we think they should follow. Currently, as European Commission President Jean-Claude Junker put it, the rules do not “correspond to the notion of fiscal justice”.

So why do we think that the current rules for businesses do not correspond to the notion of fiscal justice?

• One reason is that the majority of us pay a lot more than the 1% tax on our income that some companies managed to get from the Luxembourg government. More than 300 international companies channelled hundreds of billions of dollars through Luxembourg to save billions of euros in taxes.
• Another reason is that for most of us, our income taxes are decided in transparency by our national governments and parliaments. In Luxembourg, companies proposed their own tax rates to the government. They presented their own tax rules and received written assurance that their plans would be viewed favourably by the Ministry of Finance. Wouldn’t you want to negotiate the level of tax with your tax office?

The defence argument presented by Luxembourg is that nothing illegal has occurred. Perhaps not, but I challenge the Luxembourg government to answer two additional questions: were the practices and decision making processes legitimate and transparent; and would a fair fiscal contribution made by these companies support social protection systems in the countries in which they are based? Because there is a general consensus on the need for state rules, I hope that they can be discussed and agreed in a transparent and democratic way. This is vital not only for fiscal justice, but for social justice too.

Let’s engage!

Pierre Baussand, Director