Sunday, October 26, 2008

That elephant nobody wants to mention

VAT is one of those things everybody goes on about. There are periodic campaigns to lower or abolish VAT for whatever happens to take people's fancy at the time. On a previous occasion I mentioned the fatuousness of the Cut the VAT campaign. I have been told by organizations and individuals involved that it was a good campaign even if it could lead to nothing. I beg to differ. A campaign that is pointless is not a good one. It makes people feel that they have been cheated.

In that posting I mentioned that the Commission, the one organization that can actually do something about VAT has been planning to introduce a little flexibility in the structure. Not, you understand, that any country will now be able to decide on various matters to do with VAT, let alone be allowed to opt out of it and decide to have, let us say, a local sales tax. Far from it. Just a little flexibility.

Lord Willoughby de Broke asked HMG in writing what they proposed to do about the Commission proposals.
Whether they will support at the November Economic and Financial Affairs Council meeting the European Commission's proposal to amend VAT directive 2006/112/EC to allow member states flexibility on VAT rates for labour-intensive services.
Let's face it our government can do nothing about the tax itself or any flexibility. It can support or not support the European Commission's proposals.

It would appear that even that is beyond them. Here is Lord Myners's reply:
The Government are generally supportive of the legislative proposal adopted by the Commission, consistent with its position of supporting the flexibility of member states to apply their own choice of VAT rates to further their domestic priorities and social objectives, provided that this does not materially affect the functioning of the internal market.

Member states are currently discussing the Commission proposal, and whether any amendments should be made before it is considered by Ministers, at official level in Council working groups. The Government will take a view on the final text when it is submitted to Ministers by the presidency.


Alec Yates said...

Reassuring, well yes especially as we now have a new Trade Commissioner, one with great experience especially in financial matters, namely Baroness Ashton!

Helen said...

Trade Commissioners don't deal with VAT. Individual Commissioners are not really as important as all that. There will be a new Commission next year but that is unlikely to make any difference. That's really the point. This is a managerial form of governance.

Anonymous said...

"A campaign that is pointless is not a good one. It makes people feel that they have been cheated."

In principle this is true. But here's our dilemma. That which is now decided by the EU cannot be blocked by democratic means.

Decision-makers - being in EU institutions and not our elected Parliament - are no longer susceptible to public pressure. Ever more decisions are immune to campaigns with such a defined 'point' as seeking to influence the accountable and stand a chance of changing the outcome.

Yet resolving this problem by leaving the EU altogether is still an enormous proposition a majority are probably not yet prepared to entertain seriously.

This is the gulf that we must somehow bridge.

So beyond the rare ratifications of treaties or demands for a referendum, we are left with having to conduct smaller campaigns whose only point is really to highlight how power has gone.

Of course, you are right, they cannot change anything in the short term. But they engage more people than will be attracted to a 'Better Off Out' withdrawalist campaign. And when an appealing and well-supported outcome is denied, they bring home the reality of our situation to people and demonstrate the necessity of a broader change in our relationship with the EU.

That is their real point - to engage a wider audience and shift public opinion further towards supporting the only act that can really change anything.

I think that's a perfectly valid and useful objective, so I would not be so quick to dismiss activities like anti-VAT campaigns on their short-term prospects alone.

Anonymous said...

As the poser of the question being debated I believe that stuartc is half right - but also half wrong. Right to underline the eunuch impotence of our Parliament to reject or even amend EU Directives and regulations - which was the purpose of my question - but wrong to conclude that a splinter-group pressure will make much difference. As he admits; "decision makers are no longer susceptible to public pressure."

Politicians are susceptible only to threats to their votes and their money; that is where painful pressure may be applied at elections.

In the 2005 General election the United Kingdom Independence Party cost the Conservatives 27 seats. That is pressure. The more the Conservative Party is faced with the prospect of losing its grasp on the levers of power and patronage the more likely it is to disengage its head from the EU sand and listen to what people like stuartc are saying.

Anonymous said...

willoughbyl @ 6:21pm ... hopefully you will agree that what you call "splinter-group pressure" organisations (but others may regard rather more as united fronts, comprising people in all parties) can be more effective at informing the public on a particular issue in those long periods between elections than widely mistrusted political parties are able to be.

The benefits of such efforts and shifts in public opinion are then available for whichever parties to reap, if they wish, when people splinter into their party political factions come those brief election times.

But you're of course right to say that elections are key opportunities to apply definitive pressure on the political class.

However, the quality of the 'ballot-box pressure' - the best any party outside the big three can hope for in our first-past-the-post system - does rather hinge on whether the politician concerned views another party as much of a threat.

In respect of the Conservatives and UKIP, I sense that the Cameron project has significantly outflanked the UKIP threat exhibited at the last election.

Having realised that the only way to appease UKIP is to adopt an anti-EU policy for which there is not yet sufficient public support in terms of votes at general elections relative to the media hammering & smears they would be subjected to - and therefore rejected that idea - the Tories were left with the only other option. Namely, to go around the problem by getting through other strategies even more votes than UKIP cost them.

The result is that they are now aiming to gain the double-value votes of soft centre-ground adherents to their chief rivals.

Looking at the polls I don't think there's any doubt that the new Tory approach is working.

Which leaves a tricky question. If this time even the Tories' attention is on getting more profitable support from elsewhere, and that is clearly working, who is a party like UKIP now pressuring?

Anonymous said...

According to today's opinion poll the Conservative lead is down to 8%. As our NY friends would say: "Go figure."

Anonymous said...

A mere 8%? Poor dears ...

But more relevant than the recent fallback, think how far they've come since 2005.

So even up 8% I figure that they've gained enough ground already through their new strategy of appealing to different audiences to more than neutralise the UKIP threat.

How many of those same 27 seats are UKIP likely to deny the Tories in 2010? Very few, if any. And the new marginal battleground is unlikely to be on such strong UKIP territory as the South East.

I expect the Conservatives have long calculated all this, and also come to terms with the fact that UKIP cannot be appeased by anything they deem possible.

So I still wonder who UKIP think they are threatening now.

Yes, non-party pressure has its problems in the EU's neo feudal political landscape. But those who advocate ballot box pressure have strategic questions to answer too.

Just standing in elections also isn't enough if, in truth, no other party much cares any more.

As an aside, those 27 extra votes for a referendum on the Lisbon Treaty would've taken that battle down to the line. So it's probably not a wise move to remind us who robbed them.

That was a major advancement opportunity denied to the eurorealist movement - a very high price to pay for UKIP's 2005 activities.

I hope someone can see a potential future pay off significant enough to compensate. If not, I trust that responsible thought is going on into the danger to eurorealism of something similar happening again post-2010.

Helen said...

The chances of the Conservatives doing anything but continuing this government's policy over the EU are slim to non-existent. They have never fought any of it and never will. So one needs to decide, stuartc, whether other issues (precious few as most of what the Tories are supposedly campaigning on are actually EU competence) are more important than all the many issues that they will be able to do nothing about.

VAT is one of those. There are no problems with short-term campaigns if they are honest. Not admitting who is actually in charge of VAT is seriously dishonest.