The top EU official charged with cleaning up the Luxembourg tax scandal has said Brussels is considering whether it should open up the tax arrangements of multinationals in Europe to full public scrutiny.

Unveiling initial steps aimed at tackling tax-dodging practices in Luxembourg and other EU countries, Pierre Moscovici, the commissioner for economic and monetary affairs, signalled there was pressure for full public disclosure on tax rulings, but also resistance to such a radical move.

There was public outrage in November when the Guardian and other media organisations revealed that dozens of big companies were benefiting from sweetheart tax deals agreed with the Luxembourg authorities over many years, in some cases cutting their tax liabilities to less than 2%.

Moscovici was ordered to draft legislation clamping down on such practices. On Wednesday he unveiled proposed new rules and called on the 28 EU governments to endorse what is dubbed the “tax transparency package” by the end of the year. The new regime would force authorities across the EU to exchange information with the other 27 governments on tax rulings they have agreed with firms.

“Our citizens expect us to accept our responsibilities,” said Moscovici. “We haven’t made much progress on company taxation. Weaknesses are being exploited by firms to reduce their tax burdens.”

While the proposed new rules could run into opposition from national EU governments that have to endorse the package, Moscovici sounded sanguine that there would be quick approval, enabling the mandatory and automatic exchange of information on tax rulings to come into effect by the end of next year.

But he tacitly admitted that the new rules did not go far enough.

“Could public disclosure for multinationals be useful?” he asked. “We are not yet there on this subject.”

In addition to the measures announced on Wednesday, he said a further action plan would be launched in June, to be followed by more measures by the end of the year. And he made plain that the exchange of information on tax rulings would need to include intensive disclosures on the practices affecting companies’ tax exposure over the past decade.

“The retroactive aspect is essential,” he said. “We must have a discussion about the last 10 years. Retroactivity is hugely important.”

Moscovici conceded that since the media revelations in November, discussions in Brussels between EU authorities and national governments had failed to deliver accurate and detailed information.

“We’ve had a discussion but it wasn’t mature enough,” he said. “What is the amount of tax evasion or tax avoidance? We can’t give a figure. It’s a lot of money, is all I can say.”

Moscovici argued that the mandatory information exchange being proposed was “not a toothless instrument”.

There are no penalties foreseen for giving companies over-generous tax arrangements, nor is it clear what other governments can do if they discover they are forfeiting revenue because of another EU government’s sweetheart deal. There is also, as proposals stand, to be no public access to the information traded between governments.

“By not including country-by-country reporting – information on where companies really employ people, hold assets and pay taxes – in the transparency proposal, the European Commission is deceiving citizens,” said Oxfam. “The European Commission is still not addressing the issue head on. This feeble proposal fails to confront tax dodging by big business, and does nothing to stop sweetheart tax deals such as those exposed by the recent LuxLeaks scandal.”

Moscovici said there was nothing illegal about tax deals between authorities and companies, that such practices were necessary and often beneficial, that there could be no talk of banning them. In any case, Brussels did not have the power to enforce a ban since tax powers reside with national governments and fiscal sovereignty is jealously guarded by the member states.

The hope is that the exchange of information will act as a deterrent in the cases of the more egregious examples of favourable tax pacts.

“Tax avoidance is bad publicity for companies,” said Moscovici. “Good behaviour will chase out bad behaviour.”

The CBI said it supported the move to greater transparency.

Rob Fontana-Reval, head of tax at the employers’ body, said: “It is important, however, that the proposals maintain normal levels of confidentiality that govern the exchange of tax information under current treaties and that the scope of information shared is restricted to formal written rulings. This will ensure businesses and tax authorities can continue having a transparent dialogue without creating an unreasonable burden on authorities that could jeopardise such arrangements.”