Time for Taxpayers from Around the World to Fight Higher Taxes

This week, taxpayer groups from around the world are meeting in Kiev, Ukraine at the 2012 World Taxpayers Associations Members’ Conference to share experiences and discuss ways to make the taxpayer movement stronger around the globe.  One of the many topics of discussion will be international taxation and how international bodies such as the United Nations and the European Union (EU) are trying to institute global tax regimes and the destructive nature of these tax regimes to a country’s sovereignty.  Increasing taxes threatens any potential economic recovery,  and, let’s not forget, when any elected or non-elected body collects taxes, there is a propensity to waste that money through bloated, inefficient, and unaccountable bureaucracies.   In an effort to heighten awareness and stop these tax increases, the Taxpayers Protection Alliance will be on a panel discussing these issues and circulating a petition to try and stop these international tax regimes (see petition here).

Given the dire financial problems facing some countries in the European Union (EU), it may not be surprising to hear about a tax that will affect people beyond those that inhabit European Union member countries.  As the Daily Caller recently reported, the Emissions Trading Scheme (ETS) “will now be levied on all flights traveling to and from the EU, meaning U.S. passengers will be forced to pay a tax for the entirety of their flight — not just the portion over EU airspace…”  Even if you don’t find this news shocking, one should find it alarming.  Particularly because of the precedent this sets for the potential policies the EU can enact in the future, which could negatively impact those living far beyond its borders.

To begin, the money collected by the emissions tax will be used by the EU and benefit the citizens of EU nations.  No matter how ardently we may disagree with how the U.S. government spends our tax dollars, at the very least we have the ability to voice our disproval through our election process.  In other words, we as citizens can hold elected officials accountable to the extent we can vote them out of office.  However, since we are not citizens of an EU country we have no form of redress.  This policy epitomizes taxation without representation.  The EU makes no bother pretending that the revenue generated from this tax will be spread to other countries or benefit citizens residing outside of the EU.  

Additionally, it is worthwhile to question the dubious assertion that an emissions tax will actually help the environment. Without getting into a policy debate about global warming and whether CO2 emissions from airplanes actually contribute to climate change, it’s fair to be skeptical of the contention that the EU’s revenue raiser will lead to a significant reduction in emissions. 

The real motivation for this tax can be found in how the EU will allocate this revenue.  It will be placed in a general treasury fund, rather an environmental program.  In a quote recently offered to the Washington Times, Marion C. Blakey, president and CEO of Aerospace Industries Association, astutely noted, “The money does not go back into environmental programs. It goes back into the general treasury. So this is a revenue raiser. Let’s call it what it is. It’s a tax, because they need the money. Cloaked in do-gooderism.”  It’s no wonder that the airlines are up in arms over this new tax, but at the end of the day they will not be the ones burdened by it.  When a company’s taxes increase, a typical reaction is not to quietly absorb the increased costs.  Instead, the company usually passes the additional costs on to its consumers, in this case the airline passengers.  In a press release, Senator Thune’s office calculated that this EU-imposed emissions tax will cost U.S. air travelers and carriers a whopping $3.1 billion dollars between 2012 and 2020.

Not only will this emissions tax harm the economy, it is a blatant violation of international law.  While an outside cash stream is an easy way to raise funds, the EU cannot ignore the reality it is in direct violation of the law.  How would the EU respond if the tables were turned and the U.S. sought to enact a tax on citizens of the EU?  Perhaps the EU could spend its time more wisely by examining ways to reduce spending and tighten its pocketbooks.  And if it still desires more money to quench its propensity to spend, then nothing is stopping the EU countries from raising taxes on its own citizens.

The emissions tax is just one of a number of taxes that are being looked at by international bodies.  Other taxes include the Financial Transaction Tax and the Solidarity Tobacco Contribution (STC)

The FTT, as set out by the United Nations, would be a world tax imposed on all financial transactions with the goal of funding a global model of social services that will provide “needy people” with a basic income, free healthcare, education and housing.  According to the TaxPayers’ Alliance, “Originally the plan was to curb fluctuations in exchange rates by preventing foreign exchange traders moving money around too fast.  Then it was adopted as a way of funding various things like the United Nations.  Most recently, it has become a way of getting money out of the financial services industry in retaliation for their incompetence leading to the financial crisis.”  And, according to Charles Goodhart, an economist at the London School of Economics, “The Tobin tax [another name for the FTT] is a bad idea, since it would greatly increase both the costs and volatility of foreign exchange dealing and throw a huge spanner into the workings of the global financial economic system.”

The STC is an effort to raise more money for international causes.  The World Health Organization, an agency of the UN, is proposing a $.05, $.03, or $.01 cent tax on tobacco products, depending on the wealth of the country where the products are being sold. This is being done with no regard to the potential economic impacts of such a policy.  According to the WHO, “Do not allow concerns about employment impact to prevent tobacco tax increases,” and “Do not allow concerns about the inflationary impact of higher tobacco taxes to deter tax increases.”  This reeks more of social engineering and tax harmonization rather than a genuine concern for healthcare.  The scariest part is that this process started in 2011 and the WHO is hoping to start collecting the first of these taxes by the end of 2012.  This is breakneck speed for any government bureaucracy.

Taxpayers from around the world are coming to realize that the commonalities that they share with each other far outnumber their differences.   Stopping these international tax increases should be a top priority as taxpayers from around the globe meet this week.