The European Parliament has overwhelmingly voted to adopt a committee report on “lessons learnt from the Pandora Papers and other revelations,” but rejected a key proposal to clamp down on tax avoidance amid pushback from conservative members.
Lawmakers voted 465 to five with six abstentions to adopt the report at a session of parliament in Strasbourg, France last week, as part of the European Union’s official response to ICIJ’s Pandora Papers investigation, which was published in October 2021.
The Pandora Papers — among the world’s biggest leaks of financial information — revealed how the rich and powerful use offshore tax havens to hide and move their money.
The Committee on Economic and Monetary Affairs held public hearings in the months following the Pandora Papers in order to prepare the final report, which highlights numerous issues raised by the ICIJ investigation, from the role of auditing and accountancy firms in aiding illicit financial flows, to the need for better protections for whistleblowers and journalists working to bring these stories to light.
Speaking during a debate ahead of the parliamentary vote, Denmark’s Niels Fuglsang, the rapporteur responsible for the report, condemned what he labeled a “rigged” financial system in which top earners use tax advisors, shell companies and fake trusts to sidestep their tax obligations.
EP Plenary session
Lessons learnt from the Pandora Papers and other revelations Opening statement https://t.co/EVQph8jnpR via @EC_AVService— Didier Reynders (@dreynders) June 14, 2023
“We have seen in the Pandora Papers that we have two systems,” Fuglsang said. “We have two sets of rules: One for the 99% of those who go to work and pay their taxes, and one for the top 1% who are able to use offshore accounts, hire tax advisers, hire lawyers that help them create shell companies and fake trusts so that they can avoid paying their taxes. And that is basically what we need to do away with.”
Fuglsang urged his colleagues to vote in favor of recommending a European minimum tax on capital gains — profits made from selling stocks, real estate and other assets — but the proposal was ultimately blocked by members of the conservative European People’s Party.
The EPP also rejected Fuglsang’s call to separate the financial advisory and auditing arms of companies that offer tax advice, though failed to block the amendment.
“We deplore the conservatives’ moves against tax justice,” Fuglsang said in a statement after the vote.
“Considering the lack of progress in reforms since this, biggest ever, leak of offshore papers, this is absolutely disgraceful.”
Negotiations over the plan to identify and prevent the misuse of shell companies — a directive known as “Unshell,” already greenlit by the European Commission — have also stalled and, some experts say, risk being further watered down.
Fuglsang and others have called for the negotiations process to be accelerated.
“[We] urge EU leaders to give teeth to the EU tax havens list, by including a minimum level of economic substance as criteria for what constitutes a tax haven, as well as tough sanctions,” France’s Aurore Lalucq said in a statement.
