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.