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Face it: Begging the EU to change our own tax rates is humiliating

If the world was a secondary school, and governments were its students, modern Ireland would be the insecure, sycophantic nerd who gets picked last for games, bumped into lockers, and victimised by noogies and atomic wedgies on a daily basis.

Amid the ongoing energy crisis, with fuel and electricity prices surging to unsustainable levels, many have pointed out that over half of fuel prices in Ireland are comprised purely of various government taxes and levies.

While they did give us a small tax cut on these goods last week, even the government themselves admit that this will not be enough to shield consumers from the rapidly spiraling costs.

And so the question naturally arises: why would the government not just give us a much bigger tax cut? I think that’s what would first occur to most people.

Well, the answer to that is fairly straightforward: they’re not allowed.

As Taoiseach Micheál Martin said this week, until we get permission from the European Commission, we can’t do anything to edit our own domestic tax policy in this area:

“We have asked the European Commission to look at more flexibility in terms of the VAT tax regime and in terms of the energy tax directive, to see if flexibilities could be allowed for member states.

So we could do more to ease the burden of these increases on people, and particularly people who are on low incomes.”

Shortly before this, similar remarks were made by Tánaiste Leo Varadkar.

“We’re going to look at ways we can respond [to the energy crisis],” he said.

“We’re not going to do anything immediately, we want to wait for the European Commission paper on this before we make a decision. Because we want to make sure that whatever we do is coordinated across European countries.”

Notably, Poland was able to lower its VAT rate on food and gas in January. So either EU member states are allowed and we’re just not doing it for some reason, or our politicians are such terrible negotiators that even a poor country like Poland can outmaneuver us. Either way, not a great look.

With that said, if you were to ask a government politician why exactly we would submit to a situation where we don’t even have full control of our own national tax policy, they’d likely give a reasonable sounding answer on its face.

In short, the European Fiscal Compact which we and most other member states signed up to puts certain restrictions on tax policies, debt repayments and budgetary matters for the stability of the euro as a currency.

Without this agreement, our politicians would say, the euro as a currency would be extremely unstable and could easily collapse.

Now, it’s worth arguing whether the euro is even good for Ireland in the first place, as monetary policy is yet another area of sovereignty we have lost. But regardless, that’s for another article. Even if you hate the euro, it’s pretty clear that your currency collapsing is a bad thing, as our Russian friends are now learning the hard way.

The point is, it’s policies like this that saw situations like the one in 2011 where the Irish national budget proposal was seen and discussed in the German Bundestag before it was put to the Dáil. The Irish government was discussing increasing VAT to 23%, and these documents were seen in a German finance committee before they were in this country.

Now, a decade later, we’re begging and pleading with Europe for the rights to tweak our VAT rate again.

Whether you think that this is a necessary evil or not is debatable. But is it not fairly embarrassing that during a moment of crisis, when so many Irish people are suffering, our elected government has to go cap in hand to the European Commission and beg them to let us modify our own domestic tax rate?

“That’s the price of EU membership”, you might say. “We have to make some compromises.” And there may be a kernel of an argument there.

But I don’t think this is what anybody had in mind when Ireland joined the EEC. In fact, it was something that many people feared.

As Eamon De Valera said in 1956 of European Federalism:

“[It would be] unwise for our people to enter into a political federation which would mean that you had a European Parliament deciding the economic circumstances of our life here.”

Ultimately, one has to wonder what is even the point of having a government anymore if something as fundamental as taxation and monetary policy can’t be controlled by our politicians?

What are we even paying them for if, when I write to my TD demanding he lower taxes on my petrol, he goes “Sorry bud, it’s out of my hands. Take it up with Ursula Von Der Leyen.” If that’s true, what do I need you for exactly?

No European Commissioner has ever appeared on a ballot paper in this country. If I asked you to name 3 current EU commissioners off the top of your head, you likely couldn’t. Nobody in Ireland knows who these people are. And yet, they apparently have more power than our elected representatives to decide what Ireland’s tax rates should be during a crisis. That is nothing short of embarrassing for a supposedly sovereign nation.

For at least a decade (and probably longer), this country has been shafted over and over again by our larger neighbours and friends.

Take, for example, the infamous Bank Bailout, which hit Ireland far harder than any other EU member state (and which actually happened, despite what Micheál Martin may tell you).

This tiny island, which comprised less than 1% of the EU’s total population, was forced to pay 42% of the European banking crisis according to Eurostat.

We even paid more than bleedin’ Germany. Not per capita mind you – I mean overall.

When it came to the Brexit negotiations, our fishing rights were sold down the swanny, with Irish fishermen losing €43 million per year in quota.

Just last year, many bigger countries in the OECD put pressure on the Irish government to make us give up our famous 12.5% corporate tax rate. The only goal of this was to make our economy less competitive and less attractive to business so other countries could have advantages over us.

Finance Minister Paschal Donohoe himself admitted this would cost us billions – and yet our government folded like a lawn chair and agreed to it anyway.

On and on the examples go. One swift kick in the bollocks after another. Whether intentionally or unintentionally, we always seem to come out the worse of almost any situation that involves our international peers.

And yet apparently, when disaster strikes, we have to beg for permission to help ourselves in our own country.

From our currency, to fish, to energy, to tax, borders, and maybe soon defence as well, everything that makes a nation self-governing is rapidly evaporating right from under us.

Instead of begging for a scrap of autonomy like Oliver Twist begging for gruel, we need to have a serious national conversation about the state Irish sovereignty, and how much more of it we are really willing to give away.



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