BRUSSELS (AP) — The European Union should harmonize tax practices better to counter the sweet deals that countries like Luxembourg have used to attract multinationals and the super-rich, the EU's executive chief said Wednesday.
European Commission chief Jean-Claude Juncker denied allegations that he was part of the problem since he had been prime minister of Luxembourg for most of the past two decades before taking up the top job at the EU's executive early this month.
"I have never given illegal tax instructions," he told the European Parliament. "Don't depict me as a friend of big capital."
As commission president now, he said he would do his utmost to make sure the system becomes watertight for any loopholes to profit from unethical tax avoidance. "What we want to see are fairer rules between the different European member states," he said.
Juncker said if EU nations are sometimes "almost diametrically opposed" between high-taxation and low-taxation systems, it "can lead to results that are not in line with ethical and moral standards."
Germany on Wednesday threw its formidable weight behind Juncker.
Spokeswoman Christiane Wirtz said Germany had "confidence in the Commission that these incidents will be cleared up, and there is no reason not to believe Mr. Juncker can do this job as Commission president. The German government has confidence in Mr. Juncker."
Germany also said it was proposing that EU countries in future disclose and regularly share information on so-called "tax rulings" — agreements between tax authorities and companies.
"We stand by tax competition, but this competition must be fair and transparent," German Finance Ministry spokesman Martin Jaeger said, agreeing that this proposal followed reports on Luxembourg's practices,
Luxembourg has said it did nothing illegal in its deals with corporations like Pepsi and IKEA offering very low corporate tax rates.
But other European nations, including neighboring France, criticized the tiny country's tax practices — particularly when they have to impose austerity cuts on their citizens to make ends meet.
Still, Luxembourg is not alone in being aggressively competitive in attracting companies. Ireland and the Netherlands are being investigated.
Associated Press writer Geir Moulson in Berlin contributed to the report
Raf Casert can be followed on Twitter at http://www.twitter.com/rcasert