The Lisbon Treaty amendment on EU harmonized taxes *

The National Platform EU Research and Information Centre
www.nationalplatform .org

18.04.2004

The Lisbon Treaty amendment on EU harmonized taxes which has not been publicly mentioned so far in Ireland’s referendum debate

Article 2.79 of the Lisbon Treaty would insert a six-word amendment -”and to avoid distorton of competition” - into the Article of the existing European Treaties dealing with harmonising indirect taxes. The full amended Article would then read as follows:

Article 113

“The Council shall , acting unanimously in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, adopt provisions for the harmonisation of legislation concerning turnover taxes, excise duties and other forms of indirect taxation to the extent that such harmonisation is necessary to ensure the establishment and the functioning of the internal market and to avoid distortion of competition .” (The Lisbon Treaty amendment is underlined) . . . Treaty on the Functioning of the European Union

The significance of this short but important amendment is that it would enable the European Court of Justice, which adjudicates on competition matters, to decide that Ireland’s 12.5% rate of corporation tax as against Britain’s 28% rate and Germany’s 30% is a distortion of competition which breaches the Treaty Articles dealing with the internal market - Art. 26 and Arts.101-9 TFEU - in relation to which qualified majority voting on the Council of Ministers applies. The Irish Government’s veto under Article 113 would be irrelevant there.

The Commission, whose job it is to police the internal market, need only point out that these big disparities in tax rates and Ireland’s reluctance to accept a Common Consolidated Tax base which would tax company profits on the basis of their sales in different EU countries, at the tax rates prevailing in those countries , constitutes a prima facie “distortion of competition” under Articles 101-109.

If Ireland refused to cooperate with what the Commission wanted, the Commision could bring it before the Court of Justice - or another country or firm could institute proceedings against it - and the Court could declare the Irish Government’s tax policy to be unlawful as in breach of the EU’s internal market provisions.

Unanimity under Article 113 would certainly be required to introduce any joint rates of company tax , but this Lisbon Treaty amendment would give the EU Commission and Court of Justice ample extra powers to erode Ireland’s low rate of corporation profits tax, whether we liked it or not. There is no other possible reason for inserting this hitherto virtually unnoticed six-word amendment by means of the Lisbon Treaty.

If an Irish-based company had 10% of its sales or turnover in Ireland and 90% in, say, Britain, its profits from its Irish sales could be taxed at 12.5% and from its British sales at 28%, under the scheme the Commission has been mooting. We might even be allowed to keep our 12.5% company tax indefinitely, but its practical benefit would be hugely eroded by proposals such as this, which this six-word Lisbon Treaty amendment is designed to facilitate.

By refusing to agree to this Lisbon amendment we refuse to hand over to the EU Commission and Court of Justice these new mechanisms to undermine the principal incentive attracting foreign companies to Ireland and keeping many of them in th country. Of course Ireland’s low corporation tax rate benefits Irish indigenous companies also.

By rejecting Lisbon and insisting on a Protocol in any new Treaty that would protect the principle of tax-competition between countries, we make a stand for economic freedom and reject the attempt to impose an economic straitjacket on the EU Member States in the interests of Germany, France and Britain, with their high company tax rates.

Anthony Coughlan Secretary

N.B. Note that harmonizing laws on indirect taxes is mandatory under Article 113: ” The Council SHALL …”

THE LISBON TREATY - WHY WE SHOULD BE CONCERNED

LISBON - NOT JUST ANOTHER EU TREATY

Below are the two key sentences of the amendment which you will be asked to put into the Irish Constitution on Thursday 12 June. If people vote Yes they will be giving the European Union the constitutional form of a Federal EU State, in which Ireland would become a provincial state or region. This would be the end of Ireland’s position as an independent sovereign country. The French and Dutch have already rejected this proposal in referendums. By voting No we remain full EU Members based on the Nice Treaty, but we reject the Lisbon Treaty as a step too far. Millions of Europeans who are being denied referendums on Lisbon by their politicians, are hoping that we will say No to it for their sakes.

“The State may ratify the Treaty of Lisbon signed at Lisbon on the 13th day of December 2007, and may be a member of the European Union established by virtue of that Treaty . No provision of this [ Irish ] Constitution invalidates laws enacted, acts done or measures adopted by the State that are necessitated by membership of the European Union, or prevents laws enacted, acts done or measures adopted by the said European Union or by institutions thereof, or by bodies competent under the treaties referred to in this section, from having the force of law in the State” (emphasis added) - 28th Amendment of the Constitution Bill, 2008
- The amendment that you are being asked to put into the Irish Constitution in the June referendum

The Lisbon Treaty would

1. Establish a legally quite new European Union in the constitutional form of a Federal EU State. This new EU based on the Lisbon Treaty would have the same name but would be fundamentally different from the present EU, which was founded by the 1993 Maastricht Treaty. Lisbon would turn Ireland into a provincial or regional state within this new Union, with the EU’s Constitution and laws being made superior to the Irish Constitution and laws in any case of conflict between the two. It would be the end of Ireland’s position as an independent sovereign State in the international community of States (Arts.1 and 47 TEU; Declaration No.17 concerning Primacy );

2. Turn us all into real citizens for the first time of this new post-Lisbon European Union, owing obedience to its laws and loyalty to its authority over and above our obedience and loyalty to Ireland and the Irish Constitution and laws. One can only be a citizen of a State. We would retain our Irish citizenship, but it would be subordinate to our EU Federal citizenship, as is normal for citizens of Federal States such as Germany, the USA, Switzerland, Canada etc. (Art.9 TEU);

3. Be a power-grab by the Big States for control of this new Union. By basing EU law-making primarily on population size , the Lisbon Treaty would double Germany’s say on the EU Council of Ministers from 8% to 17%. France’s say would go from 8% to 13%, Britain’s and Italy’s from their current 8% to 12% each. Ireland’s voting weight on a population basis would be more than halved to 1% (Art.16 TEU);

4 . Amend the existing treaties to give the EU Court of Justice the power to rule against Ireland’s 12.5% company tax rate if it decides that this is a “distortion of competition” in the EU internal market as compared with Germany’s 30% rate (Art.113 TFEU). This low rate of tax is the principal reason for foreign firms coming to Ireland and staying here when they come. Lisbon would also give the EU the power to impose its own EU taxes directly on us for the first time (Art.311 TFEU);

5. Copperfasten last December’s Laval/Vaxholm judgement of the EU Court of Justice, which makes it illegal for Governments or Trade Unions to enforce pay standards higher than the minimum wage for migrant workers. At the same time Lisbon would give the EU full control of immigration policy (Art.79 TFEU). This combination threatens the pay and working conditions of large numbers of Irish people. A new Treaty Protocol is needed to set the Laval judgement aside;

6. Remove any Irish voice from the EU Commission, the body which has the monopoly of proposing all EU laws, for five years out of every 15 (Art.17.5 TEU);

7. Abolish our right to decide who the Irish Commissioner is when it comes to our turn to be on the Commission, replacing it by a right to make “suggestions” only for the new Commission President to decide (Art.17.7 TEU);

8. Hand over to the EU the power to make laws binding on us in 32 new policy areas, such as crime, justice and policing, public services, immigration, energy, transport, tourism, sport, culture, public health, the EU budget etc.;

9. Give the EU Court of Justice the power to decide our rights as EU citizens, including such matters as the right to life, the right to strike, the rights of the child, the right to fair trial etc. Ireland’s Supreme Court would no longer have the final say on what our rights are (Art.6 TEU);

10. Be a self-amending Treaty which would permit the EU Prime Ministers to shift most of the remaining policy areas where unanimity still exists, to majority voting, without a need for new EU Treaties or referendums (Art.48 TEU);

11. Militarize the EU further, requiring Member States “to progressively improve their military capabilities” and to go to the defence of other Member States in the event of war (Art.42.7 TEU).

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Issued for public information by The National Platform EU Research and Information Centre, 24 Crawford Ave., Dublin 9; Tel.: 01-8305792; Web-site: http://www.nationalplatform .org/ ; Secretary Anthony Coughlan; Please photocopy this information sheet and pass it on to others.

End of Nations - EU Takeover and the Lisbon Treaty