The TaxPayers' Alliance - Campaign

EU Commission sends good news on VAT (and a stark lesson on sovereignty)

The EU Commission issued a press release yesterday proposing a cut in the rate of VAT on house repairs and improvements, which is encouraging for the prospects of the Cut the VAT campaign.

With over 100 MPs signed up to the Early Day Motion supporting the campaign, and a number pledging to raise the issue with the Treasury, pressure for a cut has been mounting - topped by the delivery of a 10,000-signature petition to Downing Street (see right). It's encouraging that the Commission have taken on board the message, but there's still a great struggle ahead to achieve the VAT cut.

Any VAT reduction requires unanimous agreement by all EU member states, once it has been proposed by the Commission. By allowing the EU to take control of this particular tax, our democracy has been hobbled. I've argued before that tax competition is a good thing, but even if you think it's a heinous sin, reducing VAT on home improvements is hardly unfair competition - these aren't tradable, mobile goods or even services you can register for under a flag of convenience, they're houses, which are about as fixed as assets can be.

But to stand any chance of reducing VAT on repairing our homes, we don't just have to persuade the Government, we have to persuade the EU Commission and 26 other Governments across the European Union. I still think it's worth doing, but it's absurd that how much tax should be charged on someone doing DIY in Walsall should be able to be decided by a Government sitting in Warsaw.

On this occasion, so far, we've been fortunate in that the Commission are at least suggesting the idea - and even then it will be an uphill slog to achieve a reduction, requiring the UK Government to wield genuine "top table" influence to persuade the other nations - something which would be in stark contrast to the bulk of British experience at Brussels.

Whilst these are encouraging noises from the Commission, there is a salutory lesson to be learned from the difficulty of securing a reduction even in one, sector specific area. Once sovereignty is given away - or "pooled" as the EUphemism has it - to Brussels, it is a hell of a lot more difficult for democratically elected countries to do what their voters want. For that reason, as well as so many others, we should not let Brussels get its hands on Justice and Home Affairs or Defence as is now being suggested in the cause of "ever closer union".

Demand an end to the Lisbon Treaty

Further to my post on Friday, the leaders of EU member states - including our own - have been lining up to discuss how to ignore the Irish referendum result rejecting the EU Constitution Lisbon Treaty. I'm pleased to see, therefore, that EUReferendum's Richard North and Open Europe's Neil O'Brien have team up on a petition demanding that the UK Government respect the referendum and drop ratification proceedings. Do sign the petition - it went live this morning and already has 5,457 signatures, so it seems to be gathering momentum!

Time to listen to the people on the EU

With only one constituency left to declare, and only nine having voted "yes" (and one of those only doing so by 6 votes) it seems the Irish electorate have voted solidly to reject the EU Constitution Lisbon Treaty. It is imperative, not only for democracy but also for any sense of accountability that politicians in Brussels and in every EU capital city accept the result and listen to the people.

The EU, and the national politicians who are so much more keen on integration than their constituents, have an awful track record for ignoring referendum results.

In 1992, Denmark rejected the Maastricht Treaty, but instead of accepting the No vote and ditching the Treaty, it was put to another vote in 1993. Back in 2001, Ireland voted No to the Nice Treaty, but again another referendum was swiftly scheduled and it passed. Most recently, in 2005 the French and the Dutch voted No to the EU Constitution but instead of killing the document, it was reincarnated as the current Lisbon Treaty and brought straight back, this time without referenda in any country other than Ireland, despite being an almost identical document.

The EU cannot - and must not - continue flouting the law and the express will of the people. This Treaty has been rejected by the only people who have been given the opportunity to vote on it. In its previous guise as the Constitution it was roundly rejected by both France and Holland, both key EU players, and the British Government have chickened out of holding the referendum they promised in their 2005 manifesto because it was clear the British people would vote No. Legally it should die as soon as any one country refuses to ratify. And yet what is happening as a result of the Irish vote?

Jose Manuel Barroso, President of the Commission, has called for other states to continue ratification.

Gordon Brown has phoned President Sarkozy to assure him the UK will press ahead with ratifying the Treaty in Parliament.

The Dutch are continuing with ratification, despite the express wishes of their voters in 2005.

There is a clear divide regarding the European project - the people repeatedly vote No when they are asked about continuing integration, but the political class seem dedicated to forcing it through regardless. This cannot continue. The EU spends billions of pounds of our money, and controls an estimated 80% of our new legislation. The taxpaying and voting public cannot continue to be frozen out of the legislative and public policy arena - it is antidemocratic and offensive to the 450 million people who live in EU member states.

The collective leaders of the EU and its member nations should listen to the message being sent to them by the Irish people today. Judging by their track record, and their early responses, though, they won't listen and will do their best to ride roughshod over our express wishes. If that happens, taxpayers' money will continue to be spent inefficiently and unaccountably behind closed doors, screeds of unscrutinised legislation will continue to flow from Brussels into Whitehall, British business will continue to be throttled by red tape and public resentment of the undemocratic way the EU operates will continue to grow. One thing is sure - we cannot go on like this.

Tax Harmonisation: Cutting off your nose to spite your face

Today's FT reports that the Government have become so worried about the number of companies being driven to Ireland by high-tax Britain that they are considering supporting EU tax harmonisation. In essence, having gone a long way towards ruining our economic competitiveness with tax and red tape, they have decided the fault lies not with themselves but with our neighbours who have wisely created a welcoming environment towards business.

This corrosive idea that "tax competition" is a bad thing that somehow lets low tax economies "steal" revenue from high tax economies is one that the EU Commission and various Unions have been peddling for quite some time, and threatens to do a lot of economic - and diplomatic - damage.

Ireland's economic success, for example, has been founded on low corporation tax rates. Faced with companies like Shire moving to the Republic, the obvious path would be for UK Plc to emulate the Irish and cut our own rates to similar levels to encourage businesses to stay and to spur our economy on. The harmonisation approach is simply jealousy - trashing someone else's success rather than trying to achieve anything yourself.

The unfortunate thing is that whilst smashing your neighbour's new car in a fit of jealousy might seem the best thing to do at the time, it will swiftly have repercussions on the vandal as well as the vandalised.

First up, companies like Shire will simply go somewhere else that has low taxes, and instead of Britain losing out, Britain and Ireland lose out - not exactly the result you were after.

The obvious next step (obvious if you're a harmoniser, of course) is to try to extend the enforcement of high taxes. That's what's been happening in recent years with the EU trying, sporadically, to bully Switzerland into increasing its tax rates, and it's hardly a pleasant way for friends and neighbours to behave towards each other. Pressurising other countries to change their domestic tax policies in order to protect your economy from the effects of you high taxes is not only unedifying, it's anti-democratic. It's very revealing of the EU's true opinions that underneath all the guff about peace across Europe, the greater Europa and a brotherhood of nations, as soon as one country dares maintain some independence and uses it to be successful, the Commission rounds on them with threats.

Even if you eventually succeed in forcing the whole globe to have universally high corporation tax (God forbid), the only result is that the global economy is made more sluggish by the level of taxation, resulting in lower profits, reduced GDP, fewer jobs and more misery.

The alternative is simple. If Ireland are outdoing us because they have got a tax system that works well, we should emulate it, not try to stamp it out as so called "unfair competition". It's not as though they have some unfair advantage - we have the power to slash corporation tax tomorrow, we just choose not to. It's stupid policies on our part, not some kind of weasily deception from the Irish.

Politically speaking, the harmonisation approach does not only store up economic problems and human misery for the future, it will make life much more difficult for the Government as a whole. Britain is short on allies, especially like-minded allies, in the EU, so alienating Ireland on such a crucial issue is a bad move. Furthermore, it makes people like Kitty Ussher MP sound rather hollow when they claim to stand up for business and national freedoms in the face of top-down EU legislation, as she does elsewhere in the same FT edition.

The Government have mismanaged the public finances to such a degree that they are really starting to panic - they must be careful that their short term thrashing around to find a scapegoat does not result in the economy, friendly relations with our neighbours and our democratic right to self-determination taking a beating we can ill afford.

Fighting the elephant

Richard North over at EU Referendum has been discussing the importance of the EU in the tax debate - the "elephant in the room", as he puts it. It's definitely a problem, not only tax but in all areas, that the EU is often quietly left to one side by politicians too ashamed or deceitful to admit that they have in fact signed away vast swathes of Parliamentary power and by people fearful of being tarred as euro-obsessive. Doing so is a dis-service to the issue and most of all to the people of Britain who have to foot the bill for the EU and have to live under its undemocratic rules and regulations.

Richard reckons the British think tank world has dropped the ball on the EU, and there are certainly a lot of targets yet to be shot at. There has, though, been a shift recently with the UK MPs' expenses story and the accompanying new focus on transparency and accountability naturally leading the eyes of the media on to Brussels, undeniably one of the least transparent and accountable seats of Government in the Western world. The News of the World, for example, has just started a series of investigate reports into the EU Parliament, which is a good step.

The EU is a massively important issue for all sorts of reasons, many of which fall squarely under the remit of the TPA - and it's something we'll be taking a close look at very soon, so Richard should watch this space. The elephant had better watch its step...

Holding the EU to account...and new issues at home

Last week we blogged on how the EU has not signed off its own accounts for well over a decade and had sacked former accountant Marta Andreasen for saying the EU was rife with “slush funds and fraud”.

On urging our activists to ask their MEP’s why the EU hadn’t signed off their accounts and what they were going to do about it, TPA activist Graeme Pirie got this reply:

“Thank you for your e-mail regarding the EU accounts, to which I also reply on behalf of my two West Midlands Conservative MEP colleagues Philip Bradbourn and Malcolm Harbour.

There are two main problems with the accounts. One is that 80% of the expenditure is actually the responsibility of Member States, both to implement and then report back, and a number of countries are either late and/or inaccurate in their returns – knowing that it is always the Commission that will get the blame.

Another is that there is too much money sloshing around in too many separate budgets in the first place: Conservatives believe that the EU should do less and do it better.

Meanwhile, it is curious that while our own UK Audit Office has not signed off the UK Works and Pensions budget for any single year since Labour came to power, this never seems to hit any headlines. It is however a symptom of exactly the same problem as the EU: too much money in too many pots.

A change of UK Government could help address all these issues

Every good wish

Philip Bushill-Matthews MEP
Conservative - West Midlands Region”

The reply raises some interesting points:  Why hasn’t the DWP budget been signed off by the UK Audit Office for the last ten years?

It’s time we asked them!  Email me and I will send you our Freedom of Information template letter.  Then simply fill in the blanks with your request and ask the DWP when their departmental budget was last signed off by the UK Audit Office.  If it appears Mr. Bushill-Matthews is right and they haven't been cleared by the Audit Office in the last decade, we can then ask the DWP why they haven’t signed off the accounts for almost as long as the EU. Hopefully then we can expose the flaws in this government’s own accounting as well as keeping up the pressure on the EU. 

Contact: Charles Cushing
Department for Work and Pensions
Adjudication and Constitutional Issues Policy Division
Freedom of Information and Data Protection
2nd Floor, The Adelphi
1 - 11 John Adam Street
London
WC2N 6HT
Tel: 020 7962 8581
Fax: 020 7962 8725
e-mail: freedom-of-information-request@dwp.gsi.gov.uk

The EU accounting shambles continues

Marta Andreasen, the former chief accountant of the European Union, has lost her claim against the EU for wrongful dismissal.  She was sacked after alleging that EU book-keeping was riddled with “slush funds and fraud” and disclosing that there was a £130million discrepancy between two sets of EU accounts which, incidentally, haven’t been signed off for the past thirteen years. 

This is how accountability seems to work in the EU.  Andreasen has done an excellent service to British taxpayers by making a stand on the dodgy dealings in the EU.  Taxpayers put billions into EU coffers each year and for there to be massive differences - £130million is not small change – in accounts year on year show that the EU needs to be held to account. 

Contact your MEP and demand that the EU sort out its accounts.  It’s our money, tell your MEP to fight for it.

The costs of the EU

The Bruges Group has published a report exposing how the EU takes £1,000 from every British man, woman and child a year.  UK Independence Party MEP Gerard Batten, who authors the report, unravels the damaging costs the EU is imposing on British business and taxpayers.

This report highlights how over-regulation costs British business £26 billion per annum, how the Common Agricultural Policy costs £15.6 billion and that Britain’s total membership will amount to a whopping £60.1 billion in one single year.

In recent debates on the EU, members from all parties and none have called for a cost-benefit analysis of Britain’s membership of the EU.  The Bruges Group report goes a great distance in informing the debate on the EU and further legitimising the case that we could be better off out the EU if the costs of regulation, bureaucratic meddling and interference continue to spiral.  Clearly, as this report shows, it is a debate worth having to ensure British taxpayers get a fair deal.