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Who’d Standardise Taxation? 4 June 2006

Posted by David in Europe.
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The standardisation of taxes in the European Union, as touted by some Pro-Europeans, is an unusual and bizarre proposition in the extreme. The standardisation, often referred to as “co-ordination to soothe British feelings” (Gerhard Schroeder, 2002) is seen by many as the next stage in the “political union that was always the presumption of Europeans including those who made active politics before” (Schroeder, 2002). However the idea is as heavily flawed as other attempts at integration, standardisation or whatever the favoured term currently is.

Firstly, it is economically suicidal. Membership of the Euro already means an imposed ‘one size fits all’ interest rate, to the detriment of all member state’s economies, leaving the only real flexibility as the control of taxation. By creating a ‘one size fits all’ tax system, the same problem would be extended to this field, and combined severely restrict economic growth. The global and local situation causes different problems to different levels, the impact never being felt symmetrically, and so to have the solution applied symmetrically would damage many and help no-one.

Whereas some countries, such as Ireland and particularly ‘flat tax’ Estonia, have cut taxation to boost growth, a standardised system would not allow this. Poorer nations would be held down by the standard rate, doomed to poverty for however long the EU is upheld. The tax system is a major impact on the economy and vital to be controlled correctly, locally and freely.

In the United Kingdom, the Scottish Parliament has the ability to vary income tax by 3pc, a move in the opposite direction to European standardisation. Far from working towards a single system, diversity and localism should be encouraged. The notion that it is required for a single market is nonsense; the USA has differing taxes between states (VAT for instance), and many single markets such as NAFTA or Mercosur, do not have either a single currency or single tax rate.

In addition to the huge economic restriction a standardised tax system would create, it would also be politically impossible. The inability to raise or lower taxation would mean governments unable to control services such as education and healthcare through the setting taxes, or boost growth and employment through likewise with lower rates. A good example would be Italy; already critically restricted by the shackles of Euro membership, a standardised tax system would leave its government powerless to respond. Recession and collapse would ensue at an even faster and more disastrous rate than at present.

A national electorate would simply never accept spending cuts, or economic damage, simply to be standardised with the rest of the continent, especially as even the pro-European lobby cannot find a positive reason for doing so. The ability to control taxation, and thus spending, is surely central to sovereignty and the loss of it wouldn’t be tolerated. A standardised tax system is far more ‘unified’ than most federal or even unitary nations.

The suggestion of tax standardisation is clearly an insane, illogical and ideologically dangerous notion, created by those with clearly Euro-nationalist aims. As with many European Union proposals, it no doubt owes its creation to civil servants or political ideologues, far removed from common sense and reality. It is a plan with no benefits, yet ample down sides, and so should certainly be left on the scrap heap of Europe.

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