Tax payers in Europe, Unite!

At a time when the citizens of Europe need to tighten their belts, the European Union wants to increase its spending. The EU budget for 2010 amounts to 141 billion Euros. Many European politicians and senior EU officials consider this a “paltry sum”. They want to boost the EU budget by introducing indirect European taxes, such as a higher contribution from national VAT, a tax on CO2 emissions and charges on banking and electronic communications. If Brussels itself gets its own tax-rising powers, there will be no way back. Once the tax is introduced, the tariff will go up gradually. The bureaucracy decides what the taxpayer pays. For the taxpayer himself, it’s checkmate.

Let the European Union focus on its core tasks, such as the internal market, the euro zone or a common policy on environment, transportation, immigration and energy independence. But there is no need for a huge subsidy system, financed through an EU tax. The EU is already unable to spend the full budget of the European Social Fund, the European Regional Development Fund and the Cohesion Fund, due to lack of convincing projects. Therefore the EU budget should be no more than 1 per cent of European Gross National Income (GNI).  Main elements: No introduction of direct EU taxes or increase in national VAT contributions to the EU ! Restrict the EU budget to no more than 1 percent of European GNP, so more efficient use of the existing means.

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EU considers levying taxes directly

The European Commission wants EU member states to consider allowing it to levy direct taxes – a move that could ease the burden on national budgets.  The EU’s Budget Commissioner, Janusz Lewandowski, said he would present some options next month for direct EU taxes.  Taxes on aviation, financial transactions and CO2 emission permits are all possibilities, he told the daily Financial Times Deutschland.  However, the UK promptly rejected the idea.  Historically, national governments levy taxes in the EU. “I’m hearing from a number of capitals, including important ones like Berlin, that they would like to lower their contributions [to the EU],” Mr Lewandowski said.  The 27 EU member states pay a fixed contribution to the EU budget, based on their gross domestic product and a percentage of their sales tax (VAT).  This year Germany’s transfer to the EU budget – the largest contribution – is about 21bn euros (£17.5bn).  Pressure on budgets  “Many countries want to be unburdened. In this way, the door has been opened to think about revenues that are not claimed by finance ministers,” the commissioner said.

Traditionally taxes are seen as a prerogative of nation states and any move by the commission to levy taxes directly is likely to be opposed by Eurosceptics wary of Brussels’s powers.  A British treasury minister, Lord Sassoon, said the British government “is opposed to direct taxes financing the EU budget. 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.” France and Germany are pushing for a financial transaction tax in the EU, but the UK argues that any such tax must apply globally and be co-ordinated by the International Monetary Fund.  However, all three countries are introducing separate bank levies, which will not affect smaller banks and building societies. The UK levy is expected to raise more than £8bn over four years.  The EU’s budget for this year is 122.9bn euros (£110bn) – nearly half of which is allocated to agriculture and natural resources. It is 6% bigger than the 2009 budget.