Beneath the surface of all EU regulations, under the shadows of many thousands of different laws there’s a war, a stark conflict inside the borders of European Union. It’s an economic war, fought year after year in Bruxelles and in all the EU capitals, no matter what government is actually in power.
What we got in Europe now is quite an imperfect union. Almost an hypocritical one on many matters. While in Bruxelles the EU commission and the EU parliament act forward to enlarge the borders of the union (welcome aboard Croatia!) and to empower more and more a central government, at the very same time powerful lobbies and local governments are fighting an all-scale economical war against each other.
Every country in the union got the sovereign right to set its own tax quotes on foreign investments, open market operations and so on. A number of this countries used this kind of tax weapon to compete against the other states. An example? Look at the Ireland. For about ten years they set up the lowest tax rate inside European Union for enterprises. Many giants like IBM set up in Ireland their European HQ and the green island got a few year of prosperity while other countries suffer job losses and, of course, a lot of tax losses.
The same happened in Cyprus, where all the major banks of the world got a lot of business offices. Similar conditions are on the way in Poland for foreign investments, Malta and Estonia are on the same path. Some country get a bit more jobs, some other loses the same number of jobs. Huge amounts of money migrate from nation to nation and the profits for multinational enterprises go up in the financial paradise.
Like every other war even this one get its own share of disasters. Speculation on financial markets drive to a highest rate of investments, banks commerciate more and more derivates products, real estate prices lift off like rockets… until the speculation abruptly ends. Somebody collects tons of money and the country GDP collapses. See what’s going on in Portugal, Spain, Ireland, Greece and Cyprus.
This war got a social cost too, a bitter one. Workers who lose their jobs for company relocations, budget cuts on state-related welfare, the ghosts of deflation that scares the hell out of investments funds and the risk profile of the damaged countries that rise year after year (with the likes of Moody’s that step on their graves with iron heels).
There’s only one way out, a narrow path that leads to surrender more and more of every country self-determination to the EU. If there’s one market, one set of rules and one tax system then this kind of war have to reach a stop.
2 thoughts on “The tax war”
Please… don’t make me think at tax! I just want to invite you to get this prize:
Thank you Glauco! I will post about it a few days from now.