Kaj Leers writes:  Amid the furor of a tax avoidance scandal, the new chairman of the European Commission has come out in favor of a pan-European corporate tax. With public anger over corporate tax avoidance increasing, the idea may at last have legs – in large part, ironically, thanks to the chairman’s former role.

Luxembourg was the linchpin for tax rulings – in some quarters known as “comfort letters” – that helped companies secure billions of dollars in tax savings. Having served for 25 years as Luxembourg’s prime minister and its finance minister, Jean-Claude Juncker’s fingerprints are all over this activity.

The Common Consolidated Corporate Tax Base plan is still a political non-starter: It faces profound political opposition by member states.

The European Union was created to prevent open conflict. Under the surface, though, economic wars between the member states rage on. Europe’s smaller countries in particular are constantly jostling for the attention of companies they hope will bring jobs.

A number of impressive tax avoidance schemes have brought public embarrassment to a number of governments. Companies such as Starbucks and Google, but also government-owned organisations such as the Dutch national railways company Nederlandse Spoorwegen, have made use of morally odious bilateral tax treaties and tax rulings. This while any civilian caught avoiding the tax man faces often faces harsh sentences and public persecution.

The origins of these tax schemes were benign: They were meant to draw jobs and investment. They became “Double Irish with a Dutch Sandwich.”

Public support for the fiscal arms race has rapidly waned since the onset of Europe’s financial crisis, and governments have started to ask companies who use arcane fiscal constructs to explain their actions.

If national corporate taxes are scrapped and replaced by a uniform European tax rate, the very reason for the fiscal arms race ceases to exist. Politicians who have thus far said that countries should compete on the quality of education and infrastructure can finally put their money where their mouth is and dispense with the shady tax breaks.