We were always promised that the taxes we pay are a matter for UK voters and their elected Parliament at Westminster, not for the EU to impose. When governments were signing away our power to govern ourselves they knew they had to reassure us that they would not let Brussels tax us.
They lied to us.
Today the overwhelming majority of MPs want to abolish the tampon tax. We do not see this as some luxury product that deserves a 20% VAT charge, but as a necessity that should not be taxed at all. Brussels tells us we cannot do that.
Most MPs do not want to tax green products. We think people should be able to cut their fuel bills by buying draft excluder, insulation materials and better boiler and temperature controls free of VAT. Under Brussels rules the UK Parliament put a 5% VAT on, as we were told there had to be some tax on these helpful products. Last summer the EU took the UK government to the European Court. That Court, sovereign in the UK, has instructed the UK government to raise the VAT rate on these products to the full 20% standard rate. The government and official opposition have of course delayed doing this until after the referendum.
So what does Mr Cameron tell us about our inability to choose our own taxes? He told us that in his “new deal” the EU would legislate to change its VAT laws, so we could abolish the tampon tax. He implied it might also help with the green products. After the deal the EU duly came out with proposals to change VAT, so I read them full of hope of a better tax future. I discovered that once again the EU had no intention of helping the UK.
Their consultation document on the changes they wish to make to VAT over the next couple of years contains no mention whatsoever of the UK renegotiation. It does not say the UK now has some “special status” as Mr Cameron says allowing us to change our tax rates. Instead the firm legislative proposals in their document are to centralise VAT more and to make cross border collection stronger.
At the end of the document they ask if there should be more flexibility for member states on VAT rates. They conclude that this could damage the single market, and would require the unanimous consent of all member states and the European Parliament. A document with firm proposals to centralise VAT more with promised EU legislation to do so has no firm promise of legislation to give us the flexibility we need.
The perverse and undemocratic nature of EU tax policies is underlined by their approach to company taxation. In the UK many people and all political parties think large companies should pay the full corporation tax the UK Parliament wishes to levy. We need the money for public services , and have cut the rate to one of the lowest in the advanced world to make it more likely companies will invest and work here and so pay our taxes. The EU spends much of its time considering legal cases from companies trying to get tax back from the UK, or trying to avoid future tax payments. According to the Treasury the UK lost more than £7000 million from company tax cases in the last Parliament, much of it thanks to the European Court and its decisions. The Treasury forecasts we could lose more over the next five years, as there are plenty of cases in the pipeline.
If the Treasury loses a case in UK courts under UK law, Parliament can quickly fix the law to restore the intended positon. Parliament can always legislate to make the tax levied legal. If the Treasury loses a case in the European Court, as it has been doing, Parliament has to fix the law in favour of the companies bringing the case. We have to legislate to tax them less.
The UK Parliament grew up to stop the King taxing people unfairly, and to make the King deal with people’s needs and grievances before collecting the tax. Today the EU has taken the place of the King, the sovereign. Parliament needs to have the power to stop the EU imposing on people taxes we do not agree with, and needs to have the power to collect taxes from big business we do agree with.
No wonder so many large corporations think we should stay in the EU. The EU is cutting the amount of tax they have to pay, at the cost of the rest of us who then have to put up with VAT on fuel, on green products and on tampons. We need to leave the EU so we can set the taxes we think are fair. We could also afford to abolish VAT on fuel out of saved EU contributions. That welcome change to families is illegal if we stay in the EU.
(This has appeared on the Telegraph site)