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Tuesday, 29 May, 2001, 11:09 GMT 12:09 UK
EU tax harmony - better for Britain?
With Europe still high on the agenda in the British election campaign, the French Prime Minister Lionel Jospin has called for harmonisation of some taxes between European countries, though he rejected German proposals for a more federal Europe
Chancellor Gordon Brown replied: "There is no chance of Britain supporting a corporation tax harmonisation and I think everybody now knows that." The Conservatives say that the EU has plans to harmonise taxes across all member states and that it has threatened to override any national vetoes. The Liberal Democrats say they will fight to retain the national veto over any EU-wide tax agenda. Do you think the move to more integrated taxes across the EU is a good idea? Or do you want the UK to retain its own tax-raising powers?
'Tax Harmony' is a contradiction in terms. What it really means is more taxes through the back door to pay for unelected and unaccountable bureaucrats so that they can work to destroy the economic advantage that Britain worked so hard to regain after the disasters of the '70s. This is what the French want to do certainly. Perhaps it will take another Revolution to bring them back to their senses.
The Tories say this is a referendum on the pound, does that mean that if they lose the election they will not form part of the NO campaign?
Ian, Brussels, Belgium
We have the lowest rates of tax in Europe, mainly because we have lower public spending. Now if Europe were to harmonise their taxes with ours, will they please tell the French and Germans which hospitals and schools they will close? The answer to that will show which direction our own taxes will go in any harmonisation exercise.
Can Labour guarantee that any taxes paid by UK citizens would be ringfenced for expenditure as the government of the UK sees fit?
Taking a comment below, I can't imagine that the Dutch would like to pay for improving our health service or transport systems. I wouldn't mind paying more UK tax to resolve these issues, but surely both the NHS and transport crisis are UK issues, not EU issues.
Two of the biggest disasters of the EU have been the CAP and CFP (thankyou Mr Heath for giving away all our fishing rights)
Now we through the Euro and the ECB we will have a common CEP (my term for a Common Economic Policy. Believe you me, it will be a much much bigger disaster that the CAP or CFP. Hard to believe but true!
Monica Waters, Cambridge, England
If you're going to take the EU seriously, then some tax harmonisation is inevitable, and good. Nation States should retain varying powers.
How can the EU have any claims to democracy when the majority of the people, if given a chance to have their say, would reject a single currency and all that goes with it.
Surely this would be a plus to those who oppose the influx of migrants. If we harmonise the taxes, there would be less incentive for them to come over to the UK.
The US is becoming less active in foreign policy as the world's policeman. Whose grouping do you want to belong to?
The euro is an instrument for getting us locked in into Europe. The pound does not.
Clearly what is required is a full, open, honest debate about the advantages and disadvantages of Britain joining the Euro. I have found it enormously depressing reading through the comments on this page and seeing that most contributors really have no idea of what the consequences of Britain either "in" or "out" of the Euro could mean in the long term for the British people.
Let there be an informed, responsible discussion nationwide. Please!
People need not save the pound. They need to have money to save. Life must go on. Strong money is much better than a strong pound.
German and French economic models have never exported well other than through aggression. Conversely there are 100,000 each of French and Germans in California who have consciously gone to live there because they were thwarted at home.
The UK's models have exported well - we set up the US constitution as a rebellion against the crown, as well as the German one after the Second World War. We made France by giving them the export market for Claret.
Why get managed by a loosing model?
Geoff Bunn, Malvern, UK You will often hear people complain bitterly about the political integration of Europe because it would lead to such 'disasters' as the UK adopting the same tax levels as on the continent. Then in the next breath you will hear the same people campaigning to have fuel duty reduced to the continental level.
The biggest problem this country has is the ignorance of its general population.
Tax harmonisation would be a disaster. We would be able to afford decent schools and hospitals, and there would be no incentive for people to go private. Appalling!
Pete Morgan-Lucas, Wiltshire, UK
If there were a tax on common sense, William Hague would be on of the lowest tax-payers in Europe.
Politicians hope The People will forget, but our current VAT rate was increased to its current 17.5 % level to pay for freezing the now abolished Community Tax.
VAT has never gone down again! Surprise!
Does Tax harmonisation mean we would pay less tax?
The European Union is simply a bigger version of the United Kingdom's economic model. The UK is a Union of different nations. We have harmonised taxes but the English, Scots, Welsh and Northern Irish have retained their own cultural identities.
Well let's look at the facts. The Germans have managed to assimilate the old bankrupt East into the successful West and have still continued to grow as a major economic power, with quality public services.
Cut taxes across the board by at least 50%. If there is a need for public services it should be on a pay per use basis.
Do we not trust our own leaders' judgement in taxes as with other laws and regulations? If so, we shouldn't over these powers. If not, we can change our leaders. Once we hand these powers over a to larger super-state, changing our leaders will be near impossible.
Iain, Fort Worth, USA
William Hague has just claimed that European tax harmonisation will result in higher taxes yet right wing fuel protestors are demanding that fuel be available at continental European price levels.
Don't hold your breath waiting for an explanation for the author of the ridiculously named 'Common Sense Revolution'
Hague makes a good school prefect or perhaps debating the merits of hamster ownership against gerbil ownership. Stick to the school debating society William.
I think it's essential for countries to retain control over tax levels, particularly if they're in the Euro zone. With no freedom to set interest rates, control of tax rates is probably their best way to control money supply and local inflation. Despite freedom of trade, I think the language barrier will effectively prevent goods from flowing to where prices are highest.
The EU was formed to prevent the European continent from lapsing back into a state of war. Britain must play its full part in ensuring that the horrendous acts of the two world wars are not repeated. We must be a strong player right at the heart of Europe. As for tax harmonisation: page 1 of the "secret document" states that the effect of harmonisation must be to reduce the burden of tax across the union. Enough said.
Tax harmonization is the natural result of the single currency/single market. If the EU is committed to free movement of goods and people, we cannot apply additional duties on our borders, so the only way to equalise prices and stop jobs flowing out of countries is to ensure that a level playing field exists across the continent. This means uniform taxation and duties. Over time salaries and public services should harmonize. Strangely, however, this hasn't happened in this country - just ask the residents of rural Britain, which seems instead to depend on subsidies and also to be suffering a crippling desertion of jobs and youth.
Thomas H Fryer, Madrid, Spain
I live and work in what is often loosely termed 'Europe' (Germany, to be exact) by large sections of the British media. OK, I agree that taxes in Germany are higher than those in the UK, but why then is the standard of living and the standard of public services higher than in Great Britain? Anyone care to explain?
Isn't it strange how the Conservatives were claiming that Labour had made taxes in Britain the highest in Europe, but now claim that if our tax rates were harmonised they would go up. Either they are currently
low or they are currently high. Which is it? At any rate taxes
become an irrelevance when a badly managed economy puts interest
rates up to 15% and your mortgage repayments double. You get what
you pay for!
Bill, Bucks
Tax harmonisation is already being actively pursued by several European governments, including Mr Blair's. The OECD demands that 35 independent and democratic parliaments raise their taxes or face "defensive measures" (sanctions). Territories, which would be on the receiving end, include, the Cayman Island, Barbados, Jersey, and Gibraltar. Would the UK's low tax regime be next? Either you believe that independent states should be responsible for their own fiscal policy or you do not. If Mr Blair believes this, then why is the British government colluding with this undemocratic policy?
John Proctor, Falkirk, UK
Just think, if we pull out of Europe altogether, we would be paying even less tax than we do at present.
There is no need to legislate an EU-wide tax harmonisation. In sectors where tax harmonisation can be useful, the open market will drive governments automatically towards it, because consumers are free to choose where they buy products. This is a non-issue, interesting only because it generates news coverage. It is remarkable how easily Lady Thatcher has stolen the limelight from William Hague, and it marks the obscurity of his leadership and his person. Can anyone imagine Ted Heath doing the same to Margaret Thatcher?
Retaining regional autonomy over taxation is good for the EU. Petrol, smoking and alcohol taxes vary widely, correctly representing different opinions on culture and health costs.
Actually, the European commission has no plans for tax harmonisation and the government is totally against it anyway. This is just the latest in a series of cynical lies by the Tories to try to make serious discussion impossible in this election.
Karl Peters, UK
I think Hague & cronies are now getting into a sweat, because they are about to lose & they know it! So they are now using scare tactics to get votes, but people are not stupid, they remember 18 years of Tories, and they haven't learnt a thing about the working class!
We know all about 'alternative instruments' after 45 stealth taxes. These raise indirect taxes without the need for parliament's approval, which direct taxes must have. One they are keen on in Europe is a tax on everyone's telephone.
Ray Garner, Krasnoyarsk, Russia
Oh dear! A pathetic attempt at scaremongering by the Tories, presenting this as some "secret" EU document (so secret it was presented today by the EU Commissioner and every journalist on the continent can see it) to take our hard earned pounds from us. This shambles was easily torn apart by the assembled journalists at the Tory press conference. Europe is certainly an election issue but this document is not. What next William, secret plans to make us all speak French?
Two decades of Conservative rule cost hundreds of thousands of jobs in UK manufacturing. The choice between higher taxes under Labour or higher unemployment under the Tories is a no brainer.
It would be a disaster - we here in British Isles belong to this island - 2 world wars could not take it from us - are we to yield it up to the tax man?!! We should back Britain not Europe. Leave our tax alone.
Everyone should pay taxes. That is not open to debate, either morally or economically. But do we want this power to be taken out of the hands of the UK government and placed into that of a supranational body? The answer is only yes if and when the British economic cycle locks into alignment with the rest of the continent, which it is not far away from doing. Notions that we would end up footing the bill for funding poorer European nations are foolish. The money would be pooled into a centralised budget, so there would be no way of knowing which country is paying for what. Besides, as an exceptionally wealthy country, it is our duty to the poorer regions in the EU
Derek Thornton, UK
Why don't we spend less time talking about how high or low the taxes should be and more time discussing which party or country spends the money it raises most effectively. Then perhaps we can put to bed this fallacy that you can't reduce costs (taxes) and increase quality of services. For those that don't accept this then take a long look at the commercial world as this is precisely what they have been doing ever since the first traders met in the village square. The main exception to this is when there is a monopoly situation, where typically prices rise and quality drops... how many governments do we have again?
Harmonisation was an issue raised by the NO campaign during the 1975 referendum, but, ironically enough, it was not taken seriously at the time. Shame, we could have avoided all this nonsense! However, I don't believe the EU will persist with harmonisation anyway; we don't seem to want to pay higher (German) levels of tax, preferring to suffer second rate public services instead, and I can't see the Germans wanting to pay our level of tax and thus sacrifice their better public services. Can you?
There are several points to be acknowledged here. a) Labour don't have any wish to join a Euroland tax system, b) Most other major European countries don't want this, c) World War II has nothing to do with it!
Why are people persistent on digging up the past, where we ALL fought for peace in Europe. Not against the integration of European countries, but FOR the integration! This is just another (sly) attempt to knock Europe, which by the way, we are a part of, so let's stop trying to leave it! If we took a few lessons from our European friends the UK would be a far more pleasant place to live. Europe is about working together, not destroying our individuality. And if the "Great" British pound is our national identity (which it isn't), that makes us a very sad nation. Can people start being positive and help make Britain great again, as a strong and prosperous European country.
To me this is just another example of negative campaigning by a beleaguered Tory party and Billy Bandwagon. They have just nothing positive to say and will do anything to win a few votes!
At the end of the day, no Government is stupid enough to do something clearly contrary to the national interest. Every EU country puts its own first.
If tax harmonisation was bad for the UK, the Government would veto it. Period.
In response to Paul's comment that the government would veto anything contrary to the national interest - anyone remember fishing policy, CAP, social charter, European army?
Nick, London, UK
The European Commission has made a number of other controversial proposals which have been opposed by British governments, whether Conservative or new Labour. Gordon Brown, just like Michael Portillo, would reject such proposals and since they require a unanimous vote, they would fail. The Tories still believe that Labour will accept anything from Brussels. Looking at Euro-British relations since 1997, it is simply not true.
Question for all the people who are against EU tax harmony. Do you want better public services? (I have lived in both France and Holland and believe me they have much better public services) then it is simple: you have to pay more tax. Otherwise stop complaining about education, health, public transport etc. An important note: the European taxes are not as high as you think, especially for low incomes. Personally, I was paying less tax in France than here (but I admit that this can vary).
The Tories' claims that Labour would want to harmonise taxes are disproved by the position taken at the Nice summit, where the UK kept its veto over tax rates. They are simply trying to smear the government to hide the fact that they have nothing constructive to say on the European Union - and to claim that all tax harmonisation would be upwards is wrong, as fuel taxes are less in continental Europe.
John, UK
I have lived on the Continent in the past and agree that some public services are superior, especially public transport. However, Pete Kemp fails to understand that the state pension schemes in continental are currently not funded, i.e. pensions are paid from current taxes like National Insurance. Germany, France and Italy must either start vigorously promoting private pensions fund provision or sharply increase taxation to cope with the growing pension burden. If we harmonise tax and join the Euro, we will have to contribute this. So it will not be good for us.
Robert Irons, London, UK
I'm glad to see that Thatcher has entered the debate - like or loath her at least you know what she stands for, unlike most of those in the major parties who keep fudging issues. I'm a "floating voter" and I want clarity not fog.
Living on the Continent, I can see that there are some improvements in public services arising from higher taxes, but the improvements do not reflect that I pay around 45% of my income in tax. I also pay a sort of NI for health and pension, meaning I only see around half of what I earn.
By the way, does anyone realise (the government keeps this quiet) that we already pay 90% of our customs revenue and a fair chunk of our VAT over to the EC?
D Lipman, Amman, Jordan
I firmly oppose the idea of tax harmonisation. However, I am led to understand that the Commission paper doesn't say what the Tories say it does - they rely on poor reporting and inflammatory comments to win a few points in the polls and even if it did for the Labour Party to sign up to it would be electoral suicide. Therefore they wouldn't. I'll be voting Labour and awaiting a referendum on such a major constitutional change. Anyway, didn't the Tories massively raise VAT through the 80's telling us it was a more open tax than income because one can choose where to spend - how is it now a stealth tax?
Jason Abbott, Nottingham, UK
Since Labour have a) already said they are against the plans to harmonise European taxes and b) fought for and won the right to maintain our veto on tax changes within Europe, what exactly is all the fuss about? I'll tell you - a Tory attempt to con the electorate, creating a story in the hopes of distracting us from their own full-of-holes policies on both tax and Europe. It won't work.
We are already remote from those in Westminster who determine both the rates of our taxes and on what we should spend them. Do we really think we'll have greater control when those people are in Brussels?
CM, UK
A cliché has been defined as a substitute for thought, and we have that here. The Germans do not "dictate" anything to Europe. Decisions are made by either majority or qualified majority voting. The EU has its faults, but is only widely seen as a danger in the UK. This would be a more relevant word if we had a standard of living like the Swiss. In fact, we still lag behind Western Europe on many things, and probably always will.
The historical record of the EU is that tax and ridiculous regulations have been consistently increased. The EU spends about 45% of its budget on farming, much of which is claimed fraudulently and creates massive overproduction and waste. Blair claims they intend to harmonise taxes downward but this is clearly nonsense, they view British taxes as 'harmful tax competition', and attempted to force us to impose the same punitive taxes on foreign savings as in their countries.
Instead they should compete and lower their taxes to create the best environment for business. Ireland is already finding that the EU is not happy with their low taxes. Joining the single currency and tax harmonisation completely removes our power to govern ourselves. We must never do this.
I feel we should definitely support integrated EU tax policies; the idea that we have much national autonomy is flawed anyway given the power of multinationals and the EU is our only hope against them and against the global dominance of the USA. As Malcolm Bruce of the Lib- Dems said yesterday, we are not an American colony, we are Europeans, and we should be very proud of that.
There's one simple way to stop any EU talk of tax harmonisation: If French, Italian or Spanish citizens realised that tax on drink would rise to British, or possibly Swedish levels they'd soon stop their governments even considering tax harmonisation.
Harmonisation would irreparably damage UK businesses by imposing external rates of tax that could take no account of the peculiarities of the British system. It is imperative that the UK retains its power in this area as it is only national government that can react suitably and immediately to national and even regional circumstances. Our veto will protect us in the immediate future, but it is clearly essential that Britain take a decisive stance now against such harmonisation in order to protect our national economic interests in the long-term.
Barry Ryan, London
In my experience Europe has far better public services than the UK but only pays about 2 to 3% more tax. They also have much higher state pensions and the railways work. You pays your money and takes your choice. I know what I would rather have, but none of the present parties appear to be able to deliver.
Grant Thompson, England
Ask the Irish what we should do...
The UK should keep its right to tax its own people as long as the tax levels are comparable to all EU countries. I've noticed references to "English" tax quoted in some people's comments - maybe they already think that England isn't part of the UK anymore.
Presumably Alex Banks would rather put up with 'English' public transport and health services along with his lower 'English' taxes. What a shame he has to tolerate the vastly superior services in Holland, paid for through the taxation of his neighbours. The words complete and hypocrite spring to mind.
I'm sure you love paying English tax but you don't have to put up with our sub-standard hospitals, transport and schools. Maybe if we paid the same taxes as the rest of Europe we would have the same level of public services.
Alex Banks, UK, living in Holland
I listen amazed when people spout about wanting an improved health service, better educational facilities for their children and a welfare state capable of supporting our elderly with dignity. However, we also want reduced taxes. Grow up voters, we criticise the political parties for being inept, yet we have such contradictory views that we will never be satisfied.
John B, UK
It seems to me I've heard two messages from the Conservatives recently - (1) Labour are planning to put up taxes, when the rest of the world - the US, Germany, France - are cutting theirs, and (2) if there's any tax harmonisation, UK taxes will rise. Not to mention the cry last September that we now have the highest tax rate on fuel in the EU, and we ought to bring it down to match our partners' - downward harmonisation, if I'm not mistaken!?!?
Baroness Thatcher has just scuppered the last best hope for a Tory revival by opening up the whole issue of their position on the Euro. Their 'put a decision off for the next term of office' policy is a fudge designed to paper over the chasms between pro and anti-European Tories. Realistically, few Tories see their party winning so the fight might start for the future direction of the party before the general election is over. Whatever the result, that would sink Hague.
Gary Dillon, Harlow, England
There should be no Europe wide taxes, all countries should tax as independent nations
Here's the bottom line: Do you want to make the decision on how your money is spent, or do you want government? Worse still, do you want a bunch of EU bureaucrats? Scary!
There will never be sufficient support for integrated tax-raising in Europe. Yet again, the debate in Britain the debate is dragged by the Tories onto a meaningless but emotive level - where people are left knowing less than they did to begin with.
Bob, UK
I'm astonished and angered by "Bob's" comments. I work extremely hard for what I earn, to support my family and - yes - even provide us with a (very) occasional treat.
Why shouldn't I have "a few extra quid" at the end of the month? And what makes "Bob" think that the government is better at spending my money than I am? Based on their current record, they're the last people I'd want handling my finances.
If Labour win the election with, say, 40% of the vote, where's the mandate to take even more of my earnings - without the option?
Baroness Thatcher has just handed Mr. Hague his only chance of winning the General Election. He needs to say he agrees with everything she said in her Plymouth speech and then promise the British people that he will demand a complete renegotiation of the Treaty of Rome in return for our possible continued membership of the EU. A future referendum should concern our very membership of the EU itself.
This generation has forgotten the hard-learned
lesson that higher taxes raise less revenue
as higher taxes crucify business and
kill incentive.
At least now we have a choice in
the matter. If we allow Labour to
dump our tax raising powers, our
individual votes will count for a lot
less as part of a larger European
electorate.
Brian W, Chelmsford, Essex
No. Basically I think that at heart the EU is a good idea but it needs to respect things like taxation being a choice that each nation makes by itself.
If a tax were to be placed on public transport and books, then people would simply stop buying them and turn to imports over the web. I for one already buy nearly all my music from the USA because an album from the USA costs me around £8-£10 rather than £15-£20. So more people will buy imports and in the long term the UK's economy would be the victim.
One of William Hague's pledges was to reduce petrol duty by 6p per litre, because the tax in the UK is a lot more than elsewhere in Europe. Isn't this tax harmonisation?
Without the necessary real democratic Europe-wide institutions being in place, this is a very bad move. At least at present, in the UK unpopular taxes can be changed through the ballot box.
Britain has a hard-won low taxation environment that makes us competitive in terms of the global economy. The EU would love to see our competitive edge eroded so they can stop losing business to Britain. As with most areas of the EU, I feel very strongly that we should limit our exposure to this pernicious initiative.
We should keep our own taxes and not let Europe interfere with them.
Anders Dybwad, Norway
Anders Dybwad is a fine one to make comments about joining the EU etc. His country firmly rejected it if my memory serves me correctly.
Who cares? All the main parties are against it.
Throwing away Britain's tax and spending powers would be a an economic and constitutional disaster for Britain. Tax in Europe is higher than it is in Britain, and if because of a single currency Europe imposed the same tax rates across Europe, I believe we would end up paying higher taxes for other countries' services.
Britain should always keep its right to tax its own people and to spend at what rate it decides fit, not what Germany and France say it should!
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