Press Release, 7th August 2007

DIVERSITY NOT HARMONISATION WAY FORWARD FOR EU TAX POLICY SAYS NEW GLOBAL VISION PAPER 

In a new paper for Global Vision, tax expert Damon Lambert examines the case for EU-wide tax harmonisation, the European Commission’s drive towards it and the UK government’s response.

The Commission pursues tax harmonisation with vigour; last year it increased the funding of its two key programmes by 137%.  In Red Lines, White Flag, White Lies, Blue Flag? Lambert looks at how the European Commission – despite the lack of evidence that tax harmonisation would benefit the EU and against the wishes of most Member States – seeks undemocratic methods to pursue its tax harmonisation goals, often regardless of the wider consequences.  It investigates whether tax harmonisation would actually benefit the EU; whether its proponents use it as a mask for other objectives; and whether harmonisation has been applied equally to all Member States.  By comparing ‘the public protests with the silent actions’, Lambert also scrutinises Labour’s claims to have defended the UK from EU-wide tax harmonisation. 

Lambert concludes that a uniform tax rule reduces the flexibility that EU economies need in order to react to the ever increasing risks and opportunities of globalisation.  Diversity rather than harmonisation enables Member States to respond to changing economic situations.  Rather than ever closer uniformity, EU tax policy should move towards greater devolvement at Member State level.    

The author said,  “The New Labour government has claimed false victories on reverting tax harmonisation in Europe.  On closer reflection its actions do not meet its words.  Just as it creates stealth taxes, it is now creating stealth tax harmonisation.   The EU Treaties should be rewritten to make absolutely clear that direct tax is a Member State issue, and to stop the ECJ and the European Commission using their powers to harmonise a tax system when they have no popular or Member State mandate for doing so.  The UK government should adopt such a policy immediately and obtain support from other Member States.”