Harmony in Taxation Spells Disharmony in Britain; the Euro Reality Is Coming out, Says Dennis Ellam

By Ellam, Dennis | The Birmingham Post (England), November 25, 1998 | Go to article overview

Harmony in Taxation Spells Disharmony in Britain; the Euro Reality Is Coming out, Says Dennis Ellam


Ellam, Dennis, The Birmingham Post (England)


Only the naive would have believed it might be otherwise, and now it is confirmed - if Britain signs up to a common European currency then it signs away a sovereign economy's most basic power, to fix its own levels of taxation.

Throughout the years of "consultation", the Euro federalists have kept up the pretence that such fiscal independence would be allowed, somehow.

So they would - it has been in their interests to reveal as little as possible to the public whose funds they hope, eventually, to control.

But one remark from Mr Oskar Lafontaine, the newly-appointed and hard-line Leftist finance minister in Germany's convoluted coalition government, has betrayed the real intention.

"A unified currency area needs a fair and equal tax framework," he said.

Equality, of course, can only be achieved in one of two ways; either British taxes must be raised to meet Europe's, or those in the rest of the EU will have to be lowered to the level of Britain's.

There can be no prize for guessing which option would be the most attractive, to the politicians and the bankers, or which country would be at the forefront of the drive to put it into practice.

Germany would lead the Euro-socialist bloc into its new era of "harmonisation" - Mr Lafontaine, it might be said, will prove to be a finance minister for his time.

From Britain's point of view, however, there can be no doubt that to bring harmony of taxation there would have to be considerable suffering, among individuals and families, throughout industry and commerce. From our personal taxation to our council taxe s and corporation taxes, across the whole range of revenues there would have to be substantial adjustments upward.

In a united Europe which is committed to the euro, there can no remaining pockets of "harmful tax competition among the member states."

It must never be possible, in other words, for a company looking to build its new factory, or an investor wishing to place his funds, to seek out a more attractive rate of taxation in one part of the federation than might be found in another.

This principle is enshrined in the EU's forthcoming economic plan, ringingly entitled "The New European Way: Economic Reform in the Framework of the EU", which Britain has signed as eagerly as the rest.

The Chancellor Mr Gordon Brown insists that exemption will be possible, and will be negotiated, from the harmony of tax.

Monetary union, and the increasing political union which will be essential to make the euro work, will very quickly render any such agreements worthless.

The Government's intention, we now know, is to become a member of that union as soon as political expediency allows.

And yet to much expert opinion, it is impossible to envisage how Britain might take its place, as long as its taxation levels are so far removed from the rest.

Here, for example, corporation tax stands at 31 per cent, compared to Germany's 45 per cent and Belgium's 41 per cent.

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Harmony in Taxation Spells Disharmony in Britain; the Euro Reality Is Coming out, Says Dennis Ellam
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