The Tax Effect
Real political power stems from the ability to raise taxes. That Prussian king, Frederick summed it up best when he said “No government can exist without taxation. This money must necessarily be levied on the people; and the grand art consists of levying so as not to oppress.” Clearly they didn’t call him Frederick the Great for nothing. Tax is a major reason why the government’s plans to create regional assemblies has been discarded into the bottomless well of badly thought out, badly received New Labour policies. Without real teeth and tax raising powers the regional assemblies just became another bureaucratic barrier between the ruled and the rulers. This is why 78% of North Eastern voters rightly rejected in the assembly in 2004.
This is also partly why the EU tractor has broken down in the middle of the field. I like to think of the EU as a tractor because it often gets in the way of other traffic on the road, unwilling to stop to allow others to pass, much to the frustration of everyone else. At the same time the tractor is an important and necessary tool that we wouldn’t want to give up. Surely we wouldn’t want to return to the days of the horse and plough?!
The recent debacles over the EU budget illustrates quite effectively how absurd and quarrelsome the whole EU political process is. It took a year for the leaders to agree to anything that even looked like a plan.
Late night talks in smoke filled rooms ensured that something was scribbled down before the UK handed over its Presidency of the EU, and this was only so Blair could appear to show some achievement at the end of his 6 month reign. But even this may be under threat when the greedy EU parliamentarians this week demanded more money and voted against the budget plans. So how can we get the EU tractor ploughing again?
An EU tax is the answer!
But before you start thinking that maybe horses should be brought back into service, let me explain why an EU tax would bring the EU to the citizens. Currently the EU is funded by member states on an agreed percentage of Gross National Product (GNP), and a mixture of VAT receipts, customs and excise duty.
This leads to some countries (Britain, France and Germany etc) paying more than others (Estonia, Latvia etc). But the agreement over the level of GNP is decided by leaders who spend months wrangling over how much it should be as we saw with last years budget free-for-all. National leaders are usually more preoccupied with how much they’ll get back from such things as structural funds and CAP payments. If we introduced a tax to fund the EU, much of this process could be done away with. If this was achieved by introducing an EU income tax it would be progressive (those who earn more pay more), so those from poor countries would pay less than those from rich countries. The total amount we paid would probably be much the same as before (as long as it was set at a fair level). But fundamentally it would be transparent. We would know how much the EU was costing us, and therefore we would take a greater interest in what happens. If we also gave the tax raising powers to the EU parliament, suddenly we would care who won the European election. Turnout would definitely increase from the frankly sickening current 30%. The citizens of Europe would also care what that money was spent on, and real debate on funding priories would take place. Maybe then the CAP would be reformed. The EU institutions have in the past been accused of corruption and embezzlement; these issues would be dealt with swiftly and properly with real democratic financial controls.
An EU tax is the key to Europe’s legitimacy and democratic problems. We can ill afford a repeat of recent events.