Friday, 23 November 2012

Leaked budget draft shows EU admin costs to rise 13%

A draft of the EU budget leaked today has revealed no change in a proposed significant rise in the EU's administration costs.

The latest draft, circulated by EU Council president Herman van Rompuy and revealed by
Open Europe, shows the Administration budget at €62.6bn - a 12.8% increase over the 55.5bn in the 2007-13 MFF - rather than falling with other public administration cuts in EU member countries.

The European Commission, supported by the European Parliament, 
originally proposed a 5.8% rise in the overall budget framework to 1.033tr.
This included a 6% share for Administration, taking the cost up to 62bn.

The EU's administration costs have become the focus of today's negotiations in Brussels, with the Prime Minister taking aim in particular at the pay and perks of EU officials. It would be particularly difficult for him politically to return without securing a significant cut in the EU's admin costs.

It is also not clear to what extent discussion over direct EU taxes are forming part of the EU budget negotiations.

Herman van Rompuy last week tried to turn the spotlight on Britain by proposing that proceeds from a new Financial Transactions Tax - in which Britain will not participate - should be contributed to Brussels and the amount offset against a country's contributions to the EU budget.

Last year, the European Commission
also proposed replacing the existing VAT-based contribution to the EU budget with a "modernized VAT" to arise "directly from the citizen to the EU".

The plan is thought to entail VAT levied at a fixed percentage by all member states in addition to national rates - likely to be a 1% uniform rate, rather than the 0.3% share of UK revenues the EU collects currently - and then transferred directly to the EU budget.

If no agreement on the EU budget is reached in time to allow for legal ratification of the new deal by the end of 2013 - under a political, rather than legal, Inter-Institutional Agreement - the 2013 budget will be rolled over year-by-year with a built-in 2% rise to cover inflation.

Tuesday, 20 November 2012

Commissioner: EU should take control of taxes

EU Commissioner Viviane Reding has said that the EU should take control of taxes from national governments.

Speaking at a debate in Berlin last week, the EU justice commissioner said: "The veto right in the EU council has to be scrapped. Qualified majority voting should be extended to more policy areas, for instance taxation".

Such a move would prevent any single member country, or even minority of countries, blocking Council of Ministers decisions to impose new EU taxes.

Discussion of EU taxes is likely to form part of the EU budget negotiations at a summit of leaders later this week (22-23 November), sold as a way for member states to be 'unburdened' from contributions to the EU budget.

However, the burden of funding the EU would simply be passed to people and businesses directly and, most importantly for many in Brussels, the EU's right to govern and increase those taxes in future would be conceded.

Tax plans

EU taxes have come back on the agenda as a way for the EU to raise more money in "own resources" and bypass the problematic task of requesting ever-increasing amounts of money from national governments.

Member countries currently pay towards the EU budget based on their gross national income, as well as VAT and customs duties.

The EU has already benefited financially from recent rises in VAT, imposed in many of its member countries as part of austerity programmes.

The Commission has also tried to drive through an EU Financial Transactions Tax (FTT) on banks which, due to opposition from a number of governments, is now only set to be adopted by ten member states. Without a veto, the FTT could have been imposed on all EU members by majority voting and particularly threatened the City of London's financial sector if the UK were forced to participate.

Budget Commissioner Janus Lewandowski has also proposed the EU collecting a climate tax on air traffic that would put up the price of holiday flights and expressed interest
in governing other areas of taxation, pressing governments as a first step to agree to co-ordinate the way corporation tax is calculated and to impose minimum rates of fuel taxes on energy bills and road transport, linked to levels of carbon emissions.

Decision time

The right to directly tax businesses and citizens is one of the few powers left exclusively to national governments within the EU. For the EU to gain this power would require a change to the EU treaty, ratified by each member country.

It would be politically impossible for David Cameron to agree to such a change. However, this latest statement by Viviane Reding once again reveals the intentions of those driving the EU to take further fundamental powers from member countries towards becoming a fully-fledged pan-European government.

Advancing EU political integration brings into sharper focus the fundamental decision about Britain's future we must soon make between undiplomatically blocking political union if that is what other EU countries want or letting them go their own way and seeking for ourselves a new, looser, more flexible relationship with our European neighbours that respects democracy.


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Summary - Revision of the Energy Taxation Directive

Thursday, 1 November 2012

Our politicians can't stop the EU budget rising

Amid the entertaining political theatre of yesterday's EU budget vote lies a far more fundamental debate than whether the amount Britain's pays into the EU budget should be frozen or cut. 

A debate that will soon come much more to the fore.

Much of the Westminster Village reaction to the government's defeat in Parliament last night by 13 votes is inevitably rotating around whether David Cameron is in control of his party; whether he will wield his veto to block a rise in the EU budget; whether Labour will support that veto and what will happen if the Prime Minister tries to secure MPs' approval for a deal that does not involve a budget cut.

Throw in some simplistic comparisons to John Major's Maastricht woes in the early 1990s and a mixture of the above is what the political commentariat are serving up for today's consumption.

But all that is a side show. Sure, a bit of discomfort for David Cameron and the fate of a few billion pounds rests on one option or another and the Democracy Movement, more than most, wants to see Britain's payments to the EU cut - in fact, far more dramatically than anything currently being considered.

Back in 2005, when the EU's last 2007-2014 Multi-Annual Financial Framework (MFF) was being debated, the DM launched its Stop the Cheques campaign, contrasting the cost of the EU with various cuts being made then to public services (see campaign postcards pictured above). A theme that is today, thanks partly I'm sure to our efforts making the case to MPs over the years since - but no doubt mostly due to the subsequent financial and debt crisis - a very strong aspect of debate on the subject among MPs across the party divide.

Impossible freeze  

No, the real punch to today's events will be delivered when the EU meets to hammer out a deal on the EU budget on 22-23 November.

For David Cameron to deliver his policy he must very likely veto an EU deal, but even then the EU budget will continue to rise with inflation anyway. It is certainly beyond his power to deliver Parliament's view that there should be real-terms cuts, as demonstrated by yesterday's vote. 

Then, or soon after, all the current chatter about EU budget vetoes, freezes and cuts will be shown to have been pointless. The various positions over which our Goverment (freeze or veto), Labour opposition (cut but no veto) and Parliament (real terms cut) have so publicly clashed this week will be revealed as a total waste of time due to the nature of the brave, new, post-democratic EU in which we are currently embroiled.

Pointless veto 

The domestic democratic agony we have just witnessed will have served only make more glaring the reality: It is actually impossible to freeze, and certainly to cut, the EU budget. There is nothing our Government or Parliament can do - even if working in unison - to stop the amount we hand over to the EU rising without completely re-writing our treaty links.

Seventeen of the EU's twenty seven member countries are net recipients from the EU budget, changes to which must be agreed unanimously. If no agreement is reached, the budget reverts to a cut-and-paste, year-by-year agreement with an in-built increase in line with inflation.

It is blatantly in the interest of the vast majority of net recipient countries to block any attempt to freeze the EU budget and certainly to cut it since, if unanimous agreement is not reached, the budget rises anyway.

The system is loaded in favour of the budget recipients and a perpetual increase. Both our Government and Parliament will be shown to be completely impotent, their views on the changes that should be made to the budget over-ruled and self-serving EU treaty clauses enacted to keep public cash flowing to Brussels at an ever-increasing level.

Real question

Our financial exposure to the EU will be demonstrably out of control, regardless of the cuts being suffered by public services. Our democratic institutions powerless to secure change. So what then? What does this say about democracy in today's EU-dominated Europe and is that powerlessness a future we wish to pursue?

Thanks to the brilliant work yesterday by MP Mark Reckless and supporters of his amendment, this is the far more fundamental question that will shortly hit home about Britain's relationship with the EU than would have hit the headlines through any fleeting debate about whether we should hand over a bit more, or a bit less, cash.

The soon-to-be-apparent real achievement of yesterday's events will be to have highlighted to a fuller extent the nature of the increasingly post-democratic state in which EU member countries are currently confined. 

So bring on the EU summit later this month and the start of the real debate - about how to secure a more democratic future for Britain and hopefully Europe too.