Friday, January 8, 2010

The European Political Elite Will Grab any Excuse to Push Tax Harmonization

Politicians from high-tax nations hate tax competition. It's hard to turn people into tax slaves, after all, if they can shift economic activity to a less oppressive nation. But this is old news. What is worth noting, though, is the lengths to which the statists will go to push their agenda. notes that a new report from the European Parliament says politicians should take advantage of the economic crisis to push for tax harmonization. Needless to say, there is no reason to think that tax harmonization is ever a good idea, regardless of the economy's performance (though there are good reasons to fear that long-run growth would be even more anemic in Europe if taxes were harmonized - which means, not surprisingly, that nations with more reasonable tax rates would be forced to adopt the bad policies of their collectivist neighbors). It's also predictable that the political elite in Brussels was utterly insincere in their promises to Ireland that tax harmonization would not be on the agenda if the Lisbon Treaty was enacted:

The economic crisis could present an opportunity to harmonise taxation policy across EU member states, according to officials at the European Parliament who contributed to a major report on the future development of the EU. ...The comprehensive document, released with minimal fanfare at the end of 2009, was prepared by researchers in the EU assembly's five policy departments. ...The report sets out three possible scenarios likely to emerge over the next five-to-ten years, saying further harmonisation of direct taxation would be "desirable but has not been realistic until now". Unified corporate tax rates, a long-standing target of European federalists, is set out as an objective. This will cause controversy in some corners, not least in Ireland, which last year was given assurances by European leaders that the Lisbon Treaty would not affect its relatively low corporate tax regime. The officials suggest the window of opportunity may not last long. ..."The problem with common fiscal and tax policies is that decisions in the EU are taken on a unanimity basis and the European Parliament has little legislative role," according to the report.

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