Thursday, November 23, 2006

The United States of Europe

In theory we have a free trade situation throughout the whole of Europe.

My company could, for instance, win a contract in Belgium and I could go and work there without the need for permits or an export licence or any other such crap.

In theory, when I travel to Europe, anything I buy there is not supposed to be subject to any further taxation when I bring it back to the UK because I've already paid tax on it in the EU country of origin, in theory you shouldn't be taxed on purchases every time you cross an EU border.

And by and large thats how it works.

Fly into Leeds/Bradford Airport from (say) Barcelona and you'll be lucky to see a customs officer there, you just walk straight through arrivals with your bags stuffed full of Barcelona-type stuff and no-one here asks you to pay any more tax on it than the tax you already paid in Barcelona.

A few years ago HM Customs decided to remove their office at Leeds/Bradford Airport and instead stuck up a sign advising that if you had anything to devclare to them you should take a taxi to their offices located in Lawnswood, about three miles distant, I'm only guessing that over the course of a couple of years they weren't ever troubled by visitors at Lawnswood because they've moved back to the airport again, but still, they are not over-worked.

The overwhelming principal to the European Union is that because there should be an equilibrium of taxation throughout all of the member states then it doesn't matter which of the states you have paid your purchase tax (VAT), and as an EU citizen you don't have to pay it twice.

Thats the theory anyway.

In practice there is nothing like tax harmony throughout the union and there is no other area where this is more apparent than in alcohol and tobacco sales.

Here in the UK we have been hammered mercilessly by successive governments who use alcohol and tobacco sales as a huge cash cow - £16,000,000,000 was collected in taxation last year from such sales in the UK and so of course the UK government is very keen to prevent any sort of outside interference in their ability to soak our population for every penny that they can.

For instance a humble bottle of wine in Belgium will attract 35 cents (Euros) in taxation and in 13 EU countries there is zero taxation on wine, including France, obviously. In the UK we pay 1.80 Euros tax on the same bottle, while the poor sods in Ireland have to pay 2.1 Euros.

We aren't daft though, with flights from local airports to hundreds of destinations throughout Europe available for as little as 5p (yes I booked one such flight last year) we are well travelled and most of us would think nothing of popping on an flight to a random city for a weekend break once, or several times a year - and we notice things.

We notice first of all that the bas'tad French keep all the best wine for themselves and of course its much, much cheaper than in the UK, so we bring some home, we bring home as much as we can carry actually, then some more, and our kids get to carry packs of wine and beer too, its a good idea to take the neighbours kids with you on a weekend break, especially teenagers as they can carry more.

And while I have never smoked, even I can see the massive descrepency between French tobacco prices and UK tobacco prices, so carton upon carton of cigarettes are stuffed into suitcases too and not content with that, many people hire large vans and trucks and catch one of many, many ferries plying the channel trade, and bring back mountains of booze and ciggies, thus denying HM Government of nearly £1,000,000,000 worth of taxation last year.

And HM Government is not best pleased.

For several years now HM Governments Customs Officers have been instructed to apply limits to the amount of alcohol and tobacco that an individual can bring back to the UK, in direct contravention of the EU law which states that anyone can buy any amount of such products as long as it is for their own personal use and not for commercial gain.Anyone who is found to be carrying more than the invented and anti-EU-law UK Government limits will have their cargo confiscated and in some cases will even have their vehicle confiscated and sold to pay the excess duty, the excess duty that is not actually chargeable according to EU law - and they've been doing this for years.

It was all due to change today thanks to random Belgium chap who had challenged his own country from doing something similar to the UK government - he argued that the wine club that he was running should be able to buy wine in France at their rate of taxation (zero) and then sell to his Belgium customers without any further taxation - this opened up a flurry of speculation about how suppliers in low taxed EU states could now sell products to high taxed EU states on the internet, which would of course be bad news for HM Government and chancellor Gordon Brown must have spent a sleepless night last night wondering where he was going to find the £16billion in lost taxation next year.

But he needn't have worried.

The European court has just ruled that a third party cannot sell such products across EU borders to individuals without regard to the destination country's different taxation laws, you can still go to another country and bring home stuff for your personal consumption, but it still cannot be commercially sold across borders without being taxed again.


Are we suprised ?


Why ?

Because who stands to lose more ? Yes thats correct, the governments who impose the draconian levels of taxation.

And who makes up and funds the European Union ?

Yes, the governments of each European state.

We should have seen right through this one, it was too good to be true.

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