Juncker tax speech not wisest move

Jean-Claude Juncker's annual "State of the Union" address was always going to be closely watched, given it was the first major policy announcement by the European Commission chief since the Brexit referendum.

But while the jibes between the overwhelmingly pro-EU parliament and triumphant eurosceptic MEPs such as Nigel Farage and Marine Le Pen kept the gallery entertained yesterday, another kind of drama was playing out.

Hours before MEPs and EU competition commissioner Margrethe Vestager began debating the Apple ruling, Juncker waded into the controversy when he deviated from his written speech.

Addressing MEPs, Juncker said “a fair playing field means that in Europe consumers are protected from cartels and abuses by powerful companies, and that every company no matter how big and fall have to pay its taxes where it makes its profits”.

Within an hour, the European Commission’s press team – and the commission’s office in Dublin – issued the official speech which specifically referenced Apple and Ireland.

“Every company, no matter how big or small, has to pay its taxes where it makes its profits. This goes for giants like Apple too, even if their market value is higher than the GDP of 165 countries in the world. In Europe we do not accept powerful companies getting illegal backroom deals on their taxes.”

It continued: “The level of taxation in a country like Ireland is not our issue. Ireland has the sovereign right to set the tax level wherever it wants. But it is not right that one company can evade taxes that could have gone to Irish families and businesses, hospitals and schools.”

The practice of deviating from his written text is not unusual for Juncker – his written speech for example referenced recent job losses in Gosselies in Belgium which failed to make it into the delivered speech. But the decision to omit reference to Ireland and Apple raised eyebrows.

Some observers said it is highly unusual for the commission to mention a specific country publicly, concluding that Juncker exercised political judgment by omitting a reference to Ireland and Apple that was likely to have been prepared by his speech-writers and civil servants.

But with further state aid rulings expected against Luxembourg covering the period when he was prime minister, Juncker may be well aware that singling out one country on tax may not be the wisest move.