Osborne tries to blame the EU for "taxes" - it doesn't charge any

Is the Chancellor hoping the public will forget he's responsible for raising taxes?

Over the next few years, we can expect the Conservatives and the right-wing press to take every opportunity to spread myths about the EU in order to win public support for David Cameron's madcap renegotiation strategy. A useful example of this tactic was offered by George Osborne during his interview with the BBC this morning. The Chancellor remarked that "a lot of big British businesses and small businesses came out last week and said actually one of Britain's problems are the taxes and regulations from Europe". 

There are many things that one can blame on the EU but "taxes" are not one of them, for the simple reason that it doesn't levy any. At no point in the history of European integration have national governments ever surrendered control of taxation to Brussels. As the EU's website helpfully explains:

This [taxation] is decided by your national government, not the EU.

Governments set tax rates on company profits, personal income, savings and capital gains (profits made from selling an asset, such as a house). The EU merely keeps an eye on these decisions to see they are fair to the EU as a whole.

This means ensuring national tax rules are consistent with the EU's goals of job creation and do not impede the free flow of goods, services and capital around the EU, or give businesses in one country an unfair advantage over competitors in another.

Moreover, national governments remain in control of raising taxes as EU law requires that no EU decisions on tax matters be taken unless all member countries are in unanimous agreement.

It's true that the introduction of VAT, which replaced the UK's existing consumption tax, the Purchase Tax, was a pre-condition of the UK joining the EEC in 1973, but since Osborne increased this tax from 17.5 per cent to an all-time high of 20 per cent in his 2010 "emergency Budget", that's presumably not what the Chancellor had in mind. 

With the UK in danger of an unprecedented triple-dip recession, it would be surprising if businesses weren't concerned about the tax burden. But unfortunately for Osborne, the only person to blame for that is him. 

Chancellor George Osborne takes part in a tour of the train wheel manufacturers Lucchini UK, at Trafford Park in Manchester earlier today. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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What's going on in Northern Ireland?

Everything you need to know about why Northern Ireland is heading for an early election - and how it all works. 

Northern Irish voters will elect a new government, just seven months after the last election. Here’s what you need to know.

It all starts with something called the Renewable Heat Incentive (RHI), a scheme designed to encourage businesses to switch to renewable sources of heating, by paying them to do so. But the plan had two flaws. Firstly, there was no upper limit to how much you could receive under the scheme and secondly there was no requirement that the new heaters replace the old.

That led to businesses installing biomass boilers to heat rooms that had previously not been heated, including storage rooms and in some cases, empty sheds.

 The cost of the scheme has now run way over budget, and although the door has been closed to new entrants, existing participants in the scheme will continue collecting money for the next 20 years, with the expected bill for the Northern Irish assembly expected to reach £1bn.  

The row is politically contentious because Arlene Foster, leader of the Democratic Unionist Party, and the First Minister of Northern Ireland, was head of the Department for Enterprise, Trade and Investment (DETI) when the scheme was rolled out, putting her at the heart of the row. Though there is no suggestion that she personally enriched herself or her allies, there are questions about how DETI signed off the scheme without any safeguards and why it took so long for the testimony of whistleblowers to be acted on.

The opposition parties have called for a full inquiry and for Foster to step down while that inquiry takes place, something which she has refused to do. What happened instead is that the Deputy First Minister, Martin McGuinness, resigned his post, he said as a result of frustration with the DUP’s instrangience about the scheme.

Under the rules of the devolved assembly (of which, more below), the executive – the ministers tasked with running the government day-to-day must be compromised of politicians drawn from the parties that finish first and second in the vote, otherwise the administration is dissolved.  McGuinesss’ Sinn Fein finished second and their refusal to continue participating in the executive while Foster remains in place automatically triggers fresh elections.

Northern Ireland uses the single transferable vote (STV) to elect members of the legislative assembly (MLAs). Under STV, multiple MLAs are elected from a single constituency, to more accurately reflect the votes of the people who live there and, crucially, to prevent a repeat of the pattern of devolved rule under first-past-the-post, when prolonged one-party rule by the Unionist and Protestant majority contributed to a sense of political alienation among the Catholic minority.

Elections are contested across 18 seats, with five MPs elected to every seat. To further ensure that no part of the community is unrepresented in the running of the devolved assembly, the executive, too, is put together with a form of proportional representation. Not only does the executive require a majority in the legislature to pass its business, under a system of “mandatory coalition”, posts on the executive are allocated under the D’Hondt system of proportional representation, with posts on the executive allocated according to how well parties do, with the first party getting first pick, and so on until it comes back to the first party until all the posts are filled.

Although the parties which finish third and lower can opt out of taking their seats on the executive and instead oppose the government, if the first and second party don’t participate in the coalition, there is no government.

As it is highly unlikely that the DUP and Sinn Fein will not occupy the first and second places when the election is over, it is equally unlikely that a second election will do anything other than prolong the chaos and disunity at Stormont. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.