NationalPlatform.Org

I was in Ireland this weekend (18 April). Accidentally I met the Commission President José Manuel Barroso at the University of Cork. I had two other meetings. He made a splendid speech, particularly when he went outside his manuscript.

It became clear to me that his civil servants had agreed a part of his speech with the Irish Government representatives to mislead Irish citizens about a hot issue in the Irish debate: their low corporate tax at only 12.5 %.

Mislead is a strong – but very precise – expression. Barroso said there was nothing new in the Lisabon Treaty about taxes.

Today the EU is only competent to harmonise tax laws under Article 113 if it is “necessary to ensure the establishment of the internal market”.  With this Lisbon Treaty amendment the EU can also harmonise  tax laws if competition is distorted – this is a much wider concept. When is competition not distorted by differences?

In a new special Protocol to the Lisbon Treaty, “Protocol on the Internal Market and Competition” (No. 4),  it is also added that the Internal Market “includes a system ensuring that competition is not distorted”. National hindrances can be outlawed, even by legislation based on the so-called “Flexibility clause” referred to in this Protocol.

In Art.116 TFEU distortions of competition can be hindered by laws decided by qualified majority voting in the Council. First, the Commission consults the distorting Member State.  Article 116 then provides: “If such consultation does not result in an agreement eliminating the distortion in question, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall issue the necessary directives. Any  other appropriate measures provided for in the Treaties may be adopted.”

The Irish Government has criticized the French intentions. Well, the  tax issue is also included in the annual work program for Barroso’s European Commission for 2008!

The Commission will only publish their proposal – after the Irish referendum. All controversial proposals are delayed before referendums. This is normal practice for the Commission. It is only un-normal that the method has been leaked to the press with the publication of a private e-mail from a British diplomat referring  to information received from the Irish Government in confidence.

The Commission is working on a proposal to harmonise – maybe not the rate, but the base for calculating corporate taxes. The economic effect for Ireland may be the same.

Ireland has earned a lot on multinational companies settling in Ireland but selling products to the whole of the EU. Now, the Commission proposal – according to rumours – will distribute profit for taxation according to the spread of the turnover.

It does not sound surprising – or unjust – to me. This is the way the Commission is thinking – in spite of the Barroso speech to calm the Irish voters before their referendum scheduled for 12 June.

A joint rate will require unanimity, yes. But to outlaw the low rate in a Court verdict only requires a simple majority in the EU Court of Justice in Luxembourg. It is mis-leading not to tell the Irish the full truth about the Lisbon Treaty and taxation.

Even new direct taxes for the Union could be introduced by the Lisbon Treaty.  See Art. 311 TFEU on the establishment of new Union “own resources” by unanimity among Member States.

“…it may establish new categories of own resources”, it is said in the new Art. 311 inserted by Lisbon.

It is also said stated: “The Union shall provide itself with the means necessary to attain its objectives and carry through its policies”.
< http://www.bonde.com/index.php/bonde_UK/article/bondes_briefing_23042008 >

A Note on Jens-Peter Bonde MEP