By Ray Fleming

THERE may be a time in the future when direct taxation of EU member states by the European Commission in Brussels will be feasible but that time is certainly not now. The Commission is beginning negotiations for the next seven year period of EU budgetting which starts in 2014 and the budget commissioner Janusz Lewandowski has floated the idea that certain taxes could be raised directly by the EU -- he mentioned taxes on banks, financial transactions, air travel and carbon permits. At the moment the EU gets its funds from member states on a scale determined by their GDPs and also from import duties on goods brought into the EU single market. The Commission believes that these sources will not yield enough to fund its activities -- many of which are determined by member states -- between 2014 and 2021. Both Britain and Germany were quick to reject Mr Lewandoski's proposal yesterday. The objections to it are easy to see but at the same time, as he has pointed out, it might actually lead to a reduction in the existing annual payments made by member states. Whatever merits the Commissioner's idea may have in fiscal theory will be lost in the protests of governments and their electorates at the prospect of the EU opening up a new line of taxation which reaches directly from the EU Commission to companies and even individuals in member states. It is an idea whose time has not yet come.


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