Taxation and Representation

Apr 29, 2019

The Sunday Business Post, 28 April 2019, Some people think that they are an eyesore, but to me one of the most reassuring sights in the country are the election posters which began to appear this week. 

They underline that we are living in a functioning democracy, with elected representatives at multiple levels of the administration.  They simultaneously communicate wishful thinking about the future while also being a link to the traditions of the past. 

Election posters are immune from the hazards of manipulative social media and fake news.  They are what they are, existing because political candidates and their supporters aren't just keyboard warriors but activists who are prepared to climb ladders (or arrange to have ladders climbed) to communicate their message.  

It seems to have become fashionable to disrespect the role of an elected member of the European Parliament.  Announcements of MEP candidate nominations are frequently accompanied by mutterings about that most un-European of sauces, gravy trains.  This does the candidates a disservice.

It is true that the European Parliament does not have powers directly comparable with national parliaments but it is not toothless either.  For example, even if the UK government does manage to cobble together some form of withdrawal agreement acceptable to its own political system, that agreement still has to jump hurdles in the political system in Brussels. 

The first hurdle will be the easiest to negotiate.  The European Council, made up of the heads of government of the EU member countries, will be the most stable of all the European institutions over the next several months.  Its composition is determined by national general elections rather than Europe-wide polls and therefore in political terms it is the most powerful.  The term of office of Council president Donald Tusk may be drawing to a close, but that's the main change.  It is unlikely to stymie any Brexit withdrawal agreement, partly because only majority agreement is needed in the Council but mainly because the various heads of state will be relieved to have an opportunity to get the withdrawal agreement off the agenda.

But the withdrawal agreement will also have to be passed by the European Parliament; by the people we will be voting for in the next few weeks.  After the May elections, the composition of Parliament could look very different to the current make-up, where passing the agreement would have been pretty much a foregone conclusion.

There are political groupings in the European Parliament, akin to political groupings in national parliaments.  For a political grouping to form, there must be at least 25 members representing at least one quarter of the European Union member countries.  While the groupings are divided along traditional political lines – largely liberal, largely conservative, mainly left wing or primarily, insofar as these groupings have tax manifestoes, they share remarkable similarities.  They are based on a federalist view of the way the world should work. 

 

The groupings seem to see the EU citizen first and foremost as a consumer, able to choose freely between products and services supplied by companies competing on equal terms.  Tax policy is regarded as a way of funding EU projects and redistributing wealth rather than as a tool to stimulate the economy to provide jobs and to reduce welfare dependency. 

The European People’s Party, currently the largest grouping of MEPs (and to which the Fine Gael MEPs belong) want “fair taxes for everyone”.  Big corporations should not get tax breaks or be allowed to take advantage of loopholes not available to everyone.  Corruption, they say, “must be found and removed, both in Europe and around the world, to protect the fairness and transparency of our own European tax systems”.  They go on to promise to “fight” for “fair tax distribution in the Digital Age... the digital giants of our world must pay their fair share of financing our digital infrastructure and future investments in Europe”.

This, mind you, is from a right-leaning cohort but is almost indistinguishable from the Socialists and Democrats manifesto which states that “social rights for citizens must take priority over economic freedoms for big corporations… we want tax justice and will continue to lead the fight against tax evasion, tax avoidance and aggressive tax planning.”  In the European Parliament it seems, taxation policy is a war to be fought.  

However, while this is all well and good, when it comes to tax the European Parliament only has an advisory role.  Tax is still a sovereign function of national governments, but that is not to say that MEPs do not influence the European approach.  Outgoing MEPs like Marian Harkin and Brian Hayes consistently offered a mature and considered perspective on Irish tax principles and policies during the last term of parliament.

That role is perhaps the most underrated function of the MEP.  They are our ambassadors to the political wing of the EU, and to their peers in the parliament.  A European Parliament election is not an occasion to make a protest vote or make a careless choice in the belief that in some way an MEP’s task is unimportant. 

Granted, neither the local nor the European Parliament elections have as much significance in this country as a general election, but the audience for MEPs is wider than the election posters might suggest.

 

Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland