The EU wants a bigger share of your money. This past fall, the European Parliament debated two committee reports that, taken together, would pave the way for Brussels to seize control over a sizable part of Europe’s welfare state.
Neither report has gained much attention, unfortunately for understandable reasons. The government power grabs that gain attention often have to do with more pointed, more apparent expansions of government control than higher taxes and more welfare state spending.
Nevertheless, as we will see in a moment, these expansions of EU powers are not exactly innocuous. The fiscal route is one of the most nefarious paths to state encroachment ever invented. To see why, consider this quote from a 1931 article for The Irish Monthly, where Thomas Mulcahy noted that
The right to property, like the right to liberty, is anterior to the State
This succinct summary of the role of the state in our lives conveys one powerful message: we don’t need to motivate why we want more liberty; the burden of proof is on the shoulders of those who want more state powers.
In 1974, American philosopher Robert Nozick made the same point, though admittedly in a much more provocative fashion. He opened his book Anarchy, State, and Utopia by asking:
If the state did not exist would it be necessary to invent it?
There is a quote often attributed to C.S. Lewis that eloquently explains the existence of the modern welfare state in the context of these two statements: “a tyranny sincerely exercised for the good of its victims may be the most oppressive.”
There is one instrument of power that governments who wish to do good for their citizens, prefer to use more than any other: the tax. As the European Parliament proved back in November, the expansion of government powers through taxation is a simple matter if it rides on the back of parliamentary democracy. This works well as a counterpoint to Mulcahy’s argument: the state has no obvious right to infringe on our property rights, but if we all agree to surrender our property rights—especially if we do it piecemeal—then the expansion of government powers suddenly gains legitimacy.
It is always easier to expand taxation powers if government also gives good reasons for how that money will be spent. As an answer to Nozick’s question, government can create attractive spending programs; if they benefit a large enough segment of the population, public support is almost a given—regardless of how strongly we believe in the limitation of government powers.
As a testament to the moral force of a government ‘for your own good,’ on October 30th the European Parliament received a report from its Committee on Regional Development “on reshaping the future framework of EU structural funds.” This report, while seemingly limited in its overt ambitions, opens a big door toward major new welfare-state spending under the EU’s umbrella. The report was adopted by the Parliament on December 12th.
Let us save this report for Part II of this article; for now, we keep our eyes on the efforts to expand EU taxation powers. Those efforts were manifested in a report on November 7th from the Committee on Economic and Monetary. Called “Role of tax policy in times of crisis,” this report explains (item 2 in the report) that “in times of crisis, need for public resources is greater, as is the associated burden, underlining the necessity for all societal actors to contribute their fair share.” The report then calls for the EU to (item 14)
seize the opportunity to carry out a full-scale and comprehensive analysis of its Member States’ tax systems so that Member States can quickly introduce the necessary tax measures and abolish measures that are no longer necessary
In other words, the EU wants jurisdiction over how member states collect taxes, and what policy goals their tax systems are designed to pursue.
Does that sound technical? It will get clearer as we move along. The next part of item 14 wants the EU
to assess the added value of EU legislation and the existing loopholes for administrative cooperation in the field of taxation in order to respond more effectively to future crises
This smells like an EU power grab, does it not? It gets better—or worse: In item 15, the report provides yet more motives for why Brussels should have oversight authority over member state tax systems. It calls for “an action plan”
to strengthen the resilience of Member States’ tax systems … by making them future- and crisis-proof
This is complete nonsense. There is no such thing as a “future-proof” tax system. Period. End of story.
As for the “crisis-proof” part, this simply means that the EU wants member states to keep collecting tax revenue even if the economy is in a recession. For reasons we can return to at a later point in time, this is a very dangerous idea.
Next, the tax-grab report puts forward the boldest of all its goals with expanding EU taxation (item 19):
Member States should design their national tax systems in order to promote prosperity, equality and social inclusion and should more effectively redistribute income and wealth through fair taxation
This is a blatantly ideological statement. If this tax policy report were ever to become the law of the land in the EU, it would force member states to tax income and wealth in ways that would guarantee widespread economic stagnation across the union. As exhibits in support of this outlook, the report proposes to tax wealth and corporate profits even more than is the case today.
So far, the EU Parliament has rejected this tax-grab idea. However, during the same session where this report was voted down, the Parliament adopted the aforementioned spending report. As much as the rejection of more EU taxation powers is welcome, the Parliament cannot permanently try to sit between the two chairs of more spending ambitions and opposition to new taxes. As the Belgian prime minister recently noted, there comes a point where one has to choose one or the other.
Prime Minister De Croo appears to favor more money for the EU; a prudent conservative counterpoint would be to reject both the broader spending ambitions and the attempts by the EU to grab more of our hard-earned money.
