TaxPayers' Association of Europe - UK

Mobile charges: EU embraces command and control economy to cap mobile charges

The price to text/call from mobile to mobile, across national borders, when both phones are on different networks, is by no means cheap.  The EU has resolved to act to change this. The EU has stepped in to cap roaming charges. The average charge will fall by 60 per cent from 23 pence to 8.7 pence per minute. If only it were so simple to reduce the cost to the consumer.

What an effective and welcome measure you might say. We all like lower prices. But wait there is a catch. It seems that mobile operators still need to make a profit. It also seems that companies still need to pay their workers and invest in product development. In short, the mobile companies will need to make up the money lost from these cuts in call charges elsewhere. Consequently industry experts predict that this regulation’s main effect is actually to end the provision of free handsets to customers. Consumers will stay pay but in a different way.

The EU does not seem to recognise that they cannot legislate lower prices. Sustainable lower charges will only come about as the result of more competition in the mobile phone market and clear publication of the differential charges on offer. Consumers have already reacted to the high costs of international calls. They have begun to turn to Skype and Sms messaging to cut the cost of making calls and sending texts in response. The EU could simply require mobile phone companies to reveal the call cost per minute to the consumer prior to them agreeing to make it. Consumers could then make an informed choice as to whether to call and for how long. Instead, the EU has decided to set the prices mobile phone companies can charge. This is both unnecessary and detrimental.

These measures are unnecessary because consumers are already revealing their preferences to companies in the choices they make. They are best placed to judge whether they prioritise having a free handset or lower international call charges. Everyday they judge which company offers the best call costs and choose appropriately. Each day many of them change between operators to companies which offer packages more suited to their needs. The weight of their combined decisions forces companies to provide extra value or charge lower prices. This is why it is unnecessary for the EU to regulate prices and I will now explain why the efforts to do so are detrimental. 

Mandated cuts in charges do not cut the costs of operating mobile phone networks. Therefore mobile operators have to make up these losses elsewhere. Many are already suggesting charging for the provision of handsets for those on contracts. Companies could also reduce investment in their mobile phone network reducing service provision to Europeans in outlying areas. Such measures could also result in cuts in the dividends paid to shareholders. This at a time when the stock market is weak and companies do not need further burdens imposed on them. In short the EU is engaging in a populist measure which will yield few benefits to the consumer and imposes great costs on the companies concerned and their customers. The British Government and OFCOM the UK telecoms regulator both oppose this measure. They are right to do so.

For the 14th consecutive year we don't have a reliable record of how much taxpayers money' the EU spends and on what

The EU Comptroller General has revealed that the 2007 EU Accounts will not be signed off for the fourteenth consecutive year. This means the EU has never complied with its 1994 requirement to have its Court of Auditors provide a “declaration of assurance” that the accounts are reliable. What does mean to you the taxpayer?

In short, it means European taxpayers cannot be sure what their EU contributions are being spent on and taxpayer groups across Europe cannot appropriately hold the EU to account for this expenditure. Siim Kallas, the EU Commissioner for audit is set to inform his fellow commissioners on 23 September, before the Court of Auditors publishes its annual report on the EU budget on 10 November that the EU’s Accounts will not be signed off as accurate and reliable.

Siim Kallas has revealed that there are 17 areas of the EU budget where there are “real and unquestioned” weaknesses in accounting standards and that there has been little change in the errors in member states budget remuneration between 2006 and 2007 i.e. little improvement has been made on this. We find this lack of progress unacceptable.

The EU spent 126.5 billion EUROs in 2007 without implementing appropriate checks and balances to ensure the European taxpayer got value for money. As the European Commission recognised in their public consultation paper on the 2008/09 budget review the EU “must give citizens confidence” that EU public spending “is focused on their priorities and that the funds entrusted to the EU are well spent”. The EU is still failing to provide it's citizens with adequate reassurance that their money is not being wasted or taken through fraud.

EU citizens cannot ensure their money is well spent until the EU produce a reliable certifiable set of accounts so European taxpayers can see how much of their money is spent and on what. The EU Commision's President , José Manuel Barroso should ensure the EU accounts are signed off as accurate before he requests any more European taxpayers money.

Tax cuts back on the political agenda as the Liberal Democrats move onto Conservative turf

A new report has revealed that 35 out of the Liberal Democrats 53 English seats could be lost to the Conservatives unless they promise tax cuts. Coincidentally Lib Dem Leader Nick Clegg has promised £20 billion in tax cuts condemning the Conservatives tax and spend plans as “unimaginative” and promising the Lib Dems will be “more creative”. The question is will the two main parties match the Lib Dems new pledge of tax cuts?

Liberal Democrat conferences are not usually the place where important new debates occur. Previous conferences have debated the issue of whether goldfish could be won at local fairs, how to protect the earth from asteroids and whether 16 year olds should have access to internet pornography. All weighty subjects no doubt but not priority issues for the average British citizen.

In short, Lib Dem conferences are usually snooze fests where barmy socialists and ultra libertarians battle it out for the right to control a party which has not seen power in eighty years. However, at this conference, a serious debate about the balance between funding essential services and relieving the burden on struggling families is beginning to occur. The Liberal Democrats have actually begun to talk about reducing the size of the Government and cutting tax and this is to be welcomed.

The two main parties should take note and respond. The Labour party is facing an electoral wipe-out with Conservative poll leads averaging 20 per cent. If the party does not take decisive action to respond to the needs of Britain’s struggling families they will be punished at the polls. Meanwhile, the Conservatives are eager to preserve their momentum in the face of this bold Lib Dem move onto Conservative turf. The Conservatives have been timid in their approach to tax cuts because they fear a repeat of the 2001 and 2005 elections when Labour successfully portrayed any attempt to reduce the tax burden as a secret Tory plan to sack thousands of Nurses, Doctors and Teachers. However, it seems the mood has changed.

The majority of people now recognise the amount of government waste and believe they can spend their money better than the Government. More than two-thirds of the population believe that the Government wastes one-sixth of the money it spends and over half think that figure is one fifth of the money it spends. Tax is now third on the list of concerns of British voters. This is a very different Britain to the one that massively endorsed Brown's 2002 national insurance tax increases to fund the NHS.

Taxpayers will reward any party that recognises the call for lower taxes and responds accordingly. The Liberal Democrat plan is not perfect. There are many flaws in it. The pledge to soak the rich by closing tax loopholes could cost this country dear by driving away wealth creators. However, a debate about significant  tax reduction has begun and for this the Lib Dems are to be congratulated.

Europe slashes growth target as recession looms

The European Commission (EC) has slashed its economic growth target. The EC now predict that the Euro Zone (15 EU states) will grow by only 1.3 per cent rather than 1.7 per cent. The non EURO EU (12 EU states) will grow by 1.4 per cent rather than the previously predicted 2 per cent. This follows the news that the EURO economy actually shrank in the April-June quarter 2008 - the first ever quarter of negative growth in the Eurozone. Meanwhile, inflation is rising across the Eurozone. Inflation is set to increase to 3.8 per cent from 3.6 per cent. This is far in excess of the EC target of 2 per cent or below. Across Europe the state of the economy is deteriorating but politicians refuse to act.

Here in Britain the economy is now predicted to contract by 0.2 per cent in each of the last two quarters of 2008. However, the current government are unwilling to stimulate the economy through tax cuts. It seems British taxpayers will suffer many more months of hardship before our Government finally understands the simple truth that ordinary Brits know how to spend their money than their supposed betters in Whitehall.

Three FTSE 250 companies flee UK PLC in a week

In the past week three companies have abandoned Britain to relocate to lower tax countries such as Luxembourg, Ireland and Switzerland. The reasons they cite for this are as follows: Regus, Henderson and Charter. Each of the companies cited the high rate of corporate tax in the UK which stands at 28 per cent compared to the EU average of 24.5 per cent. They join Shire and United Business Media who  have already announced they are to relocate for tax reasons. More companies seem set to follow unless decisive action is taken now.

The Conservative opposition have called on the Government to reduce corporate tax from 28 per cent to 25 per cent and simplify business taxes to reduce the costs of compliance see here. This is a welcome step but the opposition can and should go further. The European Union average corporate tax rate is 24.5 per cent so even with the Conservatives planned reductions the British rate would be high. Ireland’s rate of 12.5 per cent would remain half that of the Conservatives proposed reductions. The message is clear - Britain needs significant reduction in its levels of Corporate tax otherwise its status as a premier league world economy will be in doubt.

Europe's economy is now shrinking: We need tax cuts now to make it grow

The European economy is slipping in to recession because European nations are failing to reduce the tax burden to stimulate economic growth. The United States is not making the same mistake. American taxpayers are now receiving rebates worth $150 billion to help boost the US economy. This is a major reason why the euro zone economy shrank in the second quarter, while growth in the United States has picked up.

In Britain the current Labour administration went on a public spending binge while times were good and now has little flexibility to both maintain its high level of public spending and introduce the necessary tax cuts. The Conservative opposition has long argued that we should share the proceeds of economic growth between tax cuts and increased public spending. This line works when there is growth to be shared. However, European politicians are no longer deciding how to share the proceeds of a growing economy. European politicians are searching for ways to keep the economy growing or in some cases stop its contraction.

None of the UK major parties seem willing to recognise what American politicians from both parties seem to understand, which is that without reductions in tax rates there will be little economic growth to share. Continued investment in public services relies on the introduction and preservation of competitive low tax regimes which encourage growth and investment. European politicians should learn from our American cousins and reduce taxes now.

Former French President Valéry Giscard d'Estaing outlines new vision for Britain in Europe

Former French President Valéry Giscard d'Estaing (architect of the European Constitution) outlined how Britain’s association with the EU should be redefined today. He said that it should remain a member of the European Union (EU) but should be given a special status to ensure it does not act as “a break on the progress of others” towards a more integrated EU today. He addressed British Parliamentarians and press on this issue at an event held by the Global Vision think tank in the UK Parliament. This was an important contribution to the debate by a skilled elder statesman and it has sparked considerable interest in the UK see here.