A taxing issue – is it for the EU to decide?

White smoke over Old Trafford may have distracted the press but manoeuvres are still ongoing in Brussels

Another EU power grab: the barriers are closing in
Simon Miller
On 10 May 2013 15:25

The UK media was busy treating the retirement of Sir Alex Ferguson as the secular equivalent of the Papal succession this week leaving David Cameron breathing a sigh of relief that Fergie-time had invaded the news slots. But away from the white smoke at Old Trafford there was another important event this week: ‘Europe Day’ – an occasion that was no doubt celebrated joyously by Commentator readers with bunting, street parties and cupcakes against the soundtrack of Ode to Joy.

What do you mean ‘no’? You didn’t celebrate yet more economic data that further demonstrates the steady collapse of the eurozone’s economic health? You didn’t celebrate the idea that European Commission president José Manuel Barroso took the opportunity to push for closer economic union?

Why ever not? Surely the argument that monetary union needs economic union is the only logical conclusion?

Unfortunately that has always been the case with a single currency but it is an argument that will find scant support in Germany let alone in the Club Med, faced as it is with even further decline. Indeed, Barosso actually went further than I expected and admitted that integration through the implicit consent of citizens had been carried out. In other words, you elected your politicians, so sod what you think.

To his credit – words I never thought I’d write – Barosso acknowledges that this has to stop. But this is because the project is under severe political strain. Calls for a breakup of the eurozone are coming from prominent politicians, not just here or in Club Med, but within paymaster general Germany too.

It is not just ‘little Englanders’ being our usual annoying selves with a fag in one hand, a pint in the other. It is everywhere. And it is no good blaming nationalist, populist tactics and sentiment.

Barosso should take a look at his own commission, at what is being proposed over the next year or so. He should take a look at his commissions’ proposals on banking information that could see free accounts and withdrawals finally bite the dust in the UK.  And at tax proposals too; there are moves to cut down the amount of tax evasion across the EU. Instead of politicians taking a look at the highly expensive corporatist, welfarist world that we inhabit, and thinking of ways for companies and individuals to pay less tax, it has been decided that cutting down on tax evasion is the best route.

And it is not just evasion that is being looked at. Some perfectly legitimate business practices are now under threat too and not just at national level. People can bleat about ‘tax-avoiding so-and-sos’ as much as they like, but it is legal, for now. Yet, from what the EU looks to be planning, that distinction may soon be gone.

Don’t believe me? Get this: the commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud, Algirdas Šemeta, this week has noticed that member states sometimes have an inclination to put national tactics before the EU approach and said that the single market needs solidarity between all member states, “so that one nation’s tax policies are not undercut by another’s”.

I’ll repeat that for you: “So that one nation’s tax policies are not undercut by another’s”. Apparently Šemeta has yet to notice that it is not the business of the EU to dictate what a nation state charges its citizens and companies.

There is a world of difference between the sharing of information between member states to ensure the compliance with home nation tax laws and making sure that “one nation’s tax policies are not undercut by another’s”. Indeed, unless you have a uniform tax-rate across the EU, there is a world of difference between a company setting up its headquarters in Luxembourg and trading in London and making sure that “one nation’s tax policies are not undercut by another’s”.

Ultimately, unless there is a uniform taxation policy, it is against the law to prohibit how a company goes by its business inside the EC. It is a nation’s choice whether it wants to make the pips squeak or not, just as it is Google’s choice to trade in London when domiciled in Dublin.

No, it is not for the EU to decide what a nation state’s tax policies are. It is bad enough that we have to bung VAT on goods, worse still that “we”, in the words of Šemeta, now apparently “need it to ensure a level playing field for businesses, so that one company does not end up paying for another's abusive tax planning”.

Do you see where this is going? Cameron gave a clue when he failed to distinguish between tax evasion and avoidance and the EU is flagging up the same thing. Of course, the commissioner couches it in terms of the member states’ right to implement the tax polices they need, in an environment of fair tax competition. But how can he marry that up with the sentiments as expressed above? How can he, on the one hand, talk about nation undercutting nation and then talk about fair tax competition? Indeed, what is fair tax competition?

Any talk about fairness when it comes to taxation is idiocy. The only question to be asked is does the taxation work?

So let’s cut the BS about fairness. It’s bad enough when a PR-politician like Cameron goes on about it; spare us from someone in such a fine, non-corrupt, non-power grabbing institution such as the EC doing the same.

Simon Miller is a contributing editor to The Commentator. Follow him on Twitter @simontm71

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