The Truth About Tax Harmonization

  • Truths and Realities:
    Tax harmonization will result in a raise in Britain's income tax to 53%. This rumor was spawned by the assumption that Britain will be forced to increase public spending by 7% of its GDP to match the EU average. No such move is planned and there is nothing in any EU treaty or rules about the single currency that would allow anyone to impose such a thing. The EU lacks the powers to set common income tax or corporation tax rates and as of yet no one is seeking to do so.

    Value Added Tax will be placed on food and children's clothing driving up the price of raising our children:
    There have been no proposals made that threaten Britain's policy on zero-rating. Zero-rated items are goods such as food and children's clothes. What is happening however is a movement to add VAT on goods in intra-community trade or exports from one EU State to another. It also addresses the need to clamp down on fraud and tax evasion.

  • Benefits of Tax Harmonization:
    Ending Corporate Flight: First, the EU's tax harmonization efforts are necessary to end harmful tax competition. Tax harmonization would mean that businesses will pay the same taxes in Germany as they would in Britain. Tax harmonization will prevent corporate flight. Companies will keep their business in Britain and not abandon us for another European country that offers better tax rates.

    Generate Extra Tax Income for Britain's Government:
    Second, most tax harmonization will concern only investments by citizens of one EU State in another EU State. Tax harmonization will not effect our ordinary shaving or shareholdings. What tax harmonization truly amounts to is an attempt to stop cross-border tax evasion by giving details of dividends and interest payments to the tax authorities in the investor's home country.

Economics of the EU