Local authorities can respond to LuxLeaks

In the past days we have learned that hundreds of multinational companies have been given extreme tax breaks by the authorities of the Duchy of Luxembourg.

The scandal exposed by LuxLeaks does not come as a surprise. The fact that large companies operating in many countries frequently engage in aggressive tax evasion schemes has been public knowledge for many years.

What surprises us is the weakness of the political response. Action needs to be taken now, at all levels. In this work local authorities can and should play the leading role. It is, after all, the local authorities that in many countries have primary responsibility for welfare services that are undermined by tax evading instruments such as those exposed by LuxLeaks.

Many people now say that it is the lack of EU powers over taxation that is to blame for the scandal. We disagree. Harmonization of taxation across Europe is not a a panacea for fair taxation nor is it a prerequisite for enforcing taxation of profit in the member country of the EU where the profit is made.

A simple and straightforward reaction to the information that has surfaced would be for national and local authorities to analyse and define the methods used in the tax evasion schemes operating through the Luxembourg jurisdiction. Companies using such methods would then be excluded from tendering processes of local authorities. As this exclusion would have a geographically neutral basis it is fully compatible with present EU legislation. Even if the use of the methods documented in LuxLeaks would not constitute any breach of law, local authorities have the right and responsibility to take them into account in determining the most economically advantageous tender.

Such action should be seen as a supplement to other important methods in the promotion of fair taxation including the requirement that all companies participating in tendering processes must make country-by-country reporting of their financial activities publicly available.

Johannes Hirvaskoski, Member of Vantaa City Council, Centre Party, Finland

Thomas Wallgren, Member of Helsinki City Council, co-chair of the Social Democratic group, Finland

Carina Nilsson, Municipal Commissioner, Social Democratic Party, Malmö, Sweden

Bertil Dahl, Municipal Commissioner, Left Party, Kalmar, Sweden

Ingegerd Akselsson Le Douaron, City Councillor, Green Party, Stockholm, Sweden

Eric Loiselet, Regional Councillor EELV (Green Party) Champagne Ardennes (CC), France

David Belliard, Councillor of Paris, co-president of the green group at the Council of Paris, France

Emmanuelle Cosse,Vice President of the Ile de France region, National secretary of the EELV group, France

Jean-François Caron, Mayor of Loos in Gohelle, EELV Councillor of the Region Nord Pas de Calais, President of the Federation of the Elected Greens, France

Anne Souyris, Councillor of Paris, co-chair of the Green Group at the Council of Paris, France

Victorine Valentin, City Councillor of Colmar, Councillor of the Alsace Region, Socialist Party, France

Cyril Kretzschmar, Regional Councillor of the Rhône-Alpes Region EELV Green Party, France

Joan Bosch, Podemos, Navarra, Spain

Cllr Ian Eiloart, Liberal Democrat Group, Lewes District Council, UK

Caroline Lucas, MP for Brighton Pavilion, Green Party, UK

Cllr Jason Kitcat, Leader of Brighton & Hove City Council, Green Party, UK

Lars Kjelkenes Giæver, City Councillor, Green Party, Lillehammer, Norway

Susanne Palsig, City Councillor, Socialist Party, Gladsaxe, Denmark