Because the EU can take a stand
It may be a trite thing to say, but I love the European ideal. I was firmly in favour of the UK remaining in the EU, to the point of threatening to karaoke Phil Collins should “Leave” win (a threat that will be carried out at an undisclosed future date). Without a doubt there is much to perfect in the European Union. But whenever I cross one of our “borders” without it being in any way noticeable, or whenever I take a step back and recall how we had “French Francs” when I was a kid and now have the euro, it means something to me. We can turn a fractious bunch of tiny warring states into a friendly, motley gaggle of a union — given determination and courage.
A hankering for union, however, does not absolve a member state from condemnable behaviour.
Luxembourg is a major tax haven. As revealed by the LuxLeaks affair (Wikipedia, International Consortium of Investigative Journalists), this proceeds through secret and personalised tax rulings that enable large multinationals to shift their profits to Luxembourg in order to benefit from highly beneficial taxation conditions.
This may seem abstract, but it isn’t. What the leaks made obvious is that Luxembourg is carrying out a massive, deliberate, industrial-grade tax-avoidance policy. It is, in effect, very directly and very efficiently stealing money from its neighbours. The amounts in question — tens of billions of euros annually — could easily cater to needs far more pressing than those of large companies.
Whether the EU should work on greater tax harmonisation is open for debate. In the absence of coordination, it can only be expected that there be a certain amount of healthy competition between member states over tax incentives. Secretly tailoring on-demand taxation “sweet deals” with blatant disregard for internationally-accepted transparency best practices does however take it far, way too far. And it does not stop there.
After LuxLeaks broke out, instead of reforming itself, Luxembourg chose to indict the whistleblowers. Today, they were found guilty and convicted. There is no question that revealing insalubrious tax practices by a member state is in the public interest and thereby constitutes whistleblowing. Whistleblowers are an essential part of democracy; without them any organisation sufficiently powerful to ensure its secrecy can remain above the law and beyond retribution.
So what should we do about Luxembourg?
Much has been said recently about Article 50, the article in the Treaty on European Union that enables a member to withdraw. There is no equivalent article enabling the Union to kick a member out, but there is nevertheless the perfect article for Luxembourg: Article 7 makes it possible “to suspend certain of the rights deriving from the application of the Treaties to the Member State in question” in cases of serious breaches to the values outlines in Article 2 — which include amongst others democracy, the rule of law, and justice; all of which Luxembourg’s actions place in evident jeopardy if not disregard.
We would not need to suspend many of Luxembourg’s EU rights. In fact, we need only suspend the EU directive that allows companies to pay taxes in a European headquarters country other than where their subsidiaries operate (and only for Luxembourg). It is short, simple, and targeted directly at the means of thievery.
With the Brexit turmoil still unfolding, it may seem like the worst moment to introduce more uncertainty into the Union. But I believe, on the contrary, that now more than ever do we need to show that the EU can be something other than a machine for turning dreams into bureaucracy, we citizens need to know that the EU, too, can be a “sweet deal”. An institution that pursues nothing other than its own continuation is doomed to fail. We unite on values and we unite on courage — or we do not unite at all. ∎