TPA Joins Forces with World Taxpayer Groups to Fight Higher Taxes

Over the next two days taxpayer groups from across Europe (and beyond) will be gathering in Brussels, Belgium to strategize about how best to monitor waste in administrative spending in the European Union (EU) and defeat attempts by the EU and United Nations (UN) from establishing tax harmonization and new international taxes.  The Taxpayers Protection Alliance is proud to be a part of this effort as we share stories and strategize.  Demanding smart, accountable, and fiscally responsible governments is not unique to the United States.  Any country whose government collects taxes and spends taxpayer money needs close scrutiny.  Politicians across the world tend to have the same motivations (good and bad) and need to be monitored very closely.  A new threat emerging is the imposition of international tax regimes in where the EU or UN imposes a tax on certain products or services.  Proposals from the UN for a Financial Transaction Tax (FTT) and a Solidarity Tobacco Contribution (STC) would set extremely dangerous precedents.

Proponents of EU tax harmonization claim that the purpose of it is to have a level playing field.  In reality, tax harmonization eliminates fiscal competition.  According to Dan Mitchell at the Cato Institute, “Tax competition exists when people can reduce tax burdens by shifting capital and/or labor from high-tax jurisdictions to low-tax jurisdictions. This migration disciplines profligate governments and rewards nations that reduce tax rates and engage in pro-growth tax reform. Tax competition is particularly important in today’s global economy, and this process has helped convince many nations to implement pro-market tax policy.”

The FTT, as set out by the UN, 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.

These attempts at establishing international tax regimes should be resisted. The EU and UN are not accountable in the same way that national governments are. In democracies, taxpayers can vote periodically against high tax governments. With international institutions, there are fewer checks and balances.

While these tax battles may seem far away from the United States, any new taxes levied by the UN will have real consequences for US products, taxpayers, and consumers.  The US cannot relinquish its sovereignty to any unelected bloated bureaucracy, especially the United Nations.