Taxation without representation?
Civitas, 11 August 2010
As Brussels slips into what Gavin Hewitt refers to as the ‘dog days‘ (the long summer break when eurocrats disperse from the city for their vacations) the EU has slyly returned to one of its more controversial proposals – the introduction of an EU-wide tax system, writes Natalie Hamill. The aspiration is for the EU to compile its own funds by levying taxes on member states, for example on financial transactions and the airline and energy industries.
The move may seem logical to some – it has frequently been argued that an economic and monetary union cannot withstand the test of time without some degree of fiscal union; however, it would also signify a giant leap forward on the EU’s steady creep into national sovereignty.
The UK, France and Germany have consistently spoken out against harmonised tax proposals, and similarly, Ireland’s initial ‘No’ vote for the Lisbon Treaty was partly triggered by the suspicion that the Treaty signified a move towards common taxation. However, according to EU budget commissioner Janusz Lewandowski, the tide of opinion is turning. Spain, Poland and Austria have all come out in support of the direct taxation initiative, and Belgium has been openly in favour for some time. Speaking in the Financial Times Deutschland, Lewandowski extolled the virtues of evolving EU taxation, insisting that the levy of EU taxes would allow member states to reduce their EU budget contributions (with the EU budget set to rise yet again next year to €142.6 billion, this argument could garner support). The current method of raising EU finances, says Mr Lewandowski, is not what the EU’s founding fathers had had in mind.
Like other prominent EU officials however, Mr Lewandowski is reluctant to discuss the colossal transfer of sovereignty from national governance to the EU Commission that such a move would entail. EU taxes would be governed by the unelected EU Commission; EU citizens would be subject to taxation without representation, and with a very limited ability to influence the EU’s levying powers.
Christopher Booker explains that the EU ‘has its own vast law-making powers, its own parliament, its own currency, its own courts. It is on the way to having its own foreign policy, its own armed forces, its own legal system and integrated police force’. Yet it lacks one of the most defining state powers – the power to levy its own taxes. The usurping of such a power from the national-level would be the true crowning of a super-state.
Is it already too late to object to such a move? Article 311 of the Treaty on the Functioning of the EU (TFEU) insists the EU must ‘provide itself with the means necessary to attain its objectives and carry through its policies’, which some sources are quoting provides the right for the EU to have the final say on taxation rights, with no get-out clauses for member states. Lord Sassoon, however, has made it quite clear that the UK would never accept such a proposal: ‘The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes’. The junior French Europe Minister, Pierre Lellouche, called the proposal ‘ill-timed’, as Europe struggles to shrug off the economic crisis and most member states are enduring tough budget cuts and deficit reduction measures.
This time around the proposal is unlikely to amount to anything, given the huge political questions such a move would engender; however it perhaps serves as a reminder of the EU’s long term intentions.