A New Year's Resolution from Brussels: Taxes

After the approval of the EU Budget last week new life has once again been given to the old idea of a common EU tax. A proposal by European Commission president Jose Manuel Barroso received support from the Christian Democrat top politicians belonging to the European People’s Party (EPP).

Barroso, a member of the EPP, called for a complete review of the budget. The aim is to create a whole new structure for EU common spending. The Commission president argued that “the structure and the methods used to negotiate the budget at the moment are not good.” He is convinced that the European Union cannot continue to operate with the present system. Barroso therefore thinks it necessary to have “a systematic revision of the budget,” a revision in which there are no “restrictions or taboos.” At present the EU budget is made up of  a gross national income-related contribution, revenues from customs duties, agricultural levies, fines and 1% of the VAT base.

Recently leaders of the EPP met at the castle of Meise near Brussels. At this meeting, which preceded the EU summit of 15 December, Austrian Chancellor Wolfgang Schüssel, Bavarian Prime Minister Edmund Stoiber and the leader of France’s centre-right UMP Nicolas Sarkozy all supported the idea of an EU tax. Germany’s new Chancellor Angela Merkel was also said to be open to the idea.

Karl Aiginger, the director of the Austrian Institute of Economic Research (WIFO), has called on the incoming Austrian EU presidency to launch a discussion on a common EU tax. Aiginger suggests EU taxes on international financial transactions, energy or CO2 emissions as well as on tobacco and alcohol.

The proposal to tax financial transactions is not new. It has also been proposed by the “anti-globalist” ATTAC movement. The damage that this proposal would do to the economy has been widely acknowledged. The taxation of Energy and CO2 emissions is equally harmful to the European economy, and based on the flawed ideas behind the Kyoto-protocol. Taxing alcohol and tobacco is basically an attempt by policy makers to moralise about what consumers should or should not use.

The good news is that (a) they did not suggest that the EU should be allowed to tax income, and (b) that any change to the current system of the financing of the EU budget will be hard to achieve because a number of countries, with Britain as the most outspoken, have always opposed direct EU taxes. Giving the EU the power to tax can only be agreed unanimously by member states.

Yet the proposal is still harmful because the EU does not need more taxes but less. Granting the EU the power to tax will not only lead to new taxes from the Union, but the idea of granting international organizations the power to tax may result in similar demands for other international organisations such as WTO, UN and OECD.

National Taxes lowered to Compensate? Yeah, Right !

The whole problem with this concept is the idea that national governments will lower their own taxes to compensate for a new E.U. tax. I just don't see it happening, or at least not fully enough to be sure that the average citizen doesn't end up paying more in the long run.

Those reading my posts in the past know my opinions about perceiving the E.U. to be so careful about not trying to mimic the U.S. system that they do everything they can to avoid comparisons. Even simple things like the monetary values of the currency have taken a different look if, for no other reason, to avoid admitting the U.S. use of a Dime and a Quarter makes more sense than a 10 cent and 20 cent piece .

States Rights with a central U.S. National Government has meant that the idea of National Identity in the E.U. while preserving a certain Central E.U. Government is completely off limits even though it is the most logical evolution.

Let's face it, the E.U. is doomed to wallow in its bureaucracy while the biggest victims will remain the regular citizens until it gets so bad they have no choice but to abandon the status quo and do something really radical.

Lord, grant me the strength to change the things I can;

the serenity to deal with the things I cannot change;

and the wisdom to know the difference.

Ofcourse it wont happen.

Ofcourse it wont happen. They'll wine and blame it on the EU. They have a 'valid' reason to impose more taxes; I wouldnt be surprised if they would impose additional taxes and try to link it with the 'EU tax'.

Why no EU income tax?

An income tax to fund the EU should be promoted. A seperate line mentioning the amount payed to support the EU on every working man's paycheck. Clear funding! People would know exactly what this whole circus is costing them. If the EU wants to dig their own grave, why not just let them, but lend them a hand.


I doubt that such a tax will

I doubt that such a tax will be welcomed in some European countries, its the EU constitution anew...I'd say go for it and I hope it blows up in their face. Problem solved.