Juncker under attack

"Tax evasion sometimes happens." That is not the best way to start off answering a question at a gathering of the globe's biggest economies from a reporter, who just likened the crime to picking people's pockets - quoting the Australian hosts of the event.

To be fair, European Commission President Jean-Claude Juncker went on to say: "Tax evasion sometimes happens, because of the interaction between very divergent national tax rules in accordance with the law. You can create the situation."

That doesn't sound that much better. Juncker, of course, wasn't owning up to accusations that Luxembourg, under his leadership as prime minister, offered generous tax breaks to around 340 multinational companies, allowing them to save billions of euros in taxes. Earlier this week, he denied having any knowledge of tax evasion taking place while he was in charge of the Grand Duchy of Luxembourg.

Such a small country; such a huge scandal; and yet no knowledge whatsoever of what was allegedly going on.

Years of denial

Luxembourg is regularly included on internationally authoritative lists of tax havens. So, if everyone else knew, how come he didn't? Politicians and bankers there have been flatly denying the accusations for years. So Juncker's denial is nothing new. The next argument of Juncker's is also an old one.

"Back in 1997, under my chairmanship, the council adopted a code of good conduct against unfair tax competition under these rules," Juncker told journalists, describing the initiative as an effort to halt the race to the bottom among EU states.

He added that other countries were also lowering their corporate tax rates to attract investment. A report from the Organization for Economic Cooperation and Development at the time backed this up, "The Government recently reduced corporate taxes to respond to tax breaks offered by other financial centers, thereby maintaining the country's competitive edge."

The country was very competitive with growth rates of around 4 percent and one of the world's richest nations per capita. But the argument was that unfair tax competition was hurting the nation's bottom line. So Luxembourg kept on raking in even more cash, in part by attracting more and more big companies from abroad to base themselves there and save on taxes back home, according to a leaked report.

Lack of coherence

At his own press conference at the G20, United Nations Secretary-General, Ban Ki-moon, said a more thorough discussion of the issue is needed, as the global economy is so tightly interconnected.

"I have been participating at G20 Leaders' meetings from the beginning and this issue has been discussed all the time, but somehow, because of differences of situations and conditions of each and every country, there has not been much coherence or agreement on this matter," Ban said.

Web of corrupt activity

Friederike Roeder from the anti-poverty group, ONE, told DW that tax evasion and corruption cost poor countries a total of $1 trillion a year. She also said the funds were flowing straight into the coffers of G20 nations - the ones that do not need it the most.

Roeder released a report prior to the conference blaming the loss on "a web of corrupt activity that involves shady deals for natural resources, the use of anonymous shell companies, money-laundering and illegal tax evasion." She said that money desperately needs to be invested in developing nations' health care and education systems and argued that would, in turn, provide even more of a boost to global growth than G-20 leaders were aiming for.

In the meantime, Juncker said the current corporate tax rules in more or less all European countries had to be changed or eliminated. "This process has not come to an end!"