Lax In Luxembourg

By Global Tax Weekly

So the European Court of Justice, supposedly the guardian of the sacred freedoms of the European Union, has chickened out of one of most important issues currently confronting the EU, at exactly the moment when it should have taken centre stage and erected or reaffirmed some principles for the Union to follow.

In recusing itself from any involvement in the structural legislative processes of the Union over the question of the Financial Transactions Tax, the Court has diminished itself and the Union, sending a message that administrative convenience is a more important principle than judicial rectitude. It will be many a long day before it recovers from this piece of egregious cowardice, if it ever does.

There are multiple theories to explain the court’s behaviour (I hereby deprive it of its capital letter – it no longer deserves it), but the most seductive is that it has indeed been seduced by the Commission. The signs of its subservience to the administrative convenience of the rue de la Loi have been on the wall for some time, not least over its repeated failure to ban national electronic gaming regimes that flagrantly defy the principles of the single market, but after this disgraceful espisode the reality of the situation is no longer in doubt.

It is no secret that I am against the whole idea of a Tobin tax, but that is not the question at issue: the court was asked fair and square to say whether the process of establishing a variable geometry group of nations could be allowed when the consequences would be deleterious for excluded member states. It is irrelevant, whether this particular eleven-legged beast (which indeed doesn’t yet exist) is itself legitimate or would offend against the EU’s principles. That wasn’t the question. All the court had to do was to consider whether and to what extent a variable geometry grouping could be allowed to damage the interests of other Member States. It seems fairly obvious that the answer has to be that no, it can’t. So why couldn’t the court say so? It’s a no-brainer that the Commission has lobbied it heavily to step sideways, while continuing with its mad-cap plan to destroy Europe’s financial sector. So much for transparency and probity in Brussels and Luxembourg. A plague on both their houses!

While the “authorities” stand supinely aside, business interests in the two countries leading this coup de folie, France and Germany, make their opposition to the proposed tax very plain. We continue to hope and believe that Europe’s leaders will avoid this piece of self-destructive craziness, but: “those who do not learn from history are condemned to repeat it.” Not clear whether it was Edmund Burke, George Santayana or Winston Churchill who orginated the exact saying; but it certainly applies in spades to the current occupants of the economic thrones in Europe.

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