European Union (Amendment) Bill

Part of the debate – in the House of Lords at 6:45 pm on 19th May 2008.

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Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch UKIP 6:45 pm, 19th May 2008

I shall also speak to Amendment No. 130. At the close of our last proceedings on 14 May the Government assured us that the new European Gendarmerie Force would not be used on British soil without the explicit consent of Parliament. The first of these two amendments attempts to make sure that after the EU acquires its own legal personality, and more generally as the EU project proceeds, British citizens will not fall foul of the EU crime of xenophobia for insulting it. We must remember the infamous EU arrest warrant which allows British citizens to be automatically extradited to any EU country purely on the say-so of a local magistrate, to stand trial under an alien system, perhaps after a long time on remand, and to face imprisonment for a list of some 32 crimes, one of which is xenophobia, which is not a crime here.

I fear that the EU's new acquisition of legal personality confirms that it is well on its way to becoming a state. Indeed, it is hard to think of any attribute of a state which the EU does not already possess, or will not possess if the Lisbon treaty becomes law. It has its own flag and anthem, although they are without legal foundation. It has, or is acquiring, its own president, armed forces, foreign secretary, foreign policy, embassies, supreme court, judicial and criminal systems, police, border and asylum controls, not to mention its currency. If any noble Lord can tell me of an attribute of a state which the EU cannot, with the support of the court, acquire under this treaty, I would be very glad to hear from him.

Those of us who oppose the project of European integration are already often accused of being xenophobes, even in your Lordships' House by otherwise perfectly civilised noble Lords, such as the noble Lord, Lord Wallace of Saltaire, and others whose blushes I will spare. Is it so far-fetched to think of such an accusation being made by our new masters in Brussels? I fear not.

The second amendment in this group, Amendment No. 130, seeks to prevent the EU from levying or harmonising direct tax in the EU, so it also looks some way into the future, although the French are already saying they want to use their forthcoming EU presidency to harmonise corporation tax. The treaties are silent on direct tax, although they control VAT and indirect tax. That has not stopped the Commission and the court imaginatively invading corporation tax based on other clauses in the treaty, particularly those covering the freedom of establishment of businesses throughout the EU. The court has decided that UK companies, such as Marks & Spencer, Cadbury Schweppes and many others, are free to arrange their losses and tax in other EU countries in ways previously barred by the Treasury, which may mean the Treasury now owes a number of British companies quite a lot of money. It would be helpful if the Minister could bring your Lordships up to date with what the latest position is here. How much money have these decisions of the Luxembourg court cost Her Majesty's Treasury?

There are also in the treaty all the provisions controlling the single market. I find it hard to see why, where the European Union wants to control direct tax, it could not use the single market provisions of the treaty to do so. Of course, if the Luxembourg court were to agree with that, there would not be anything we could do about it. I am advised that in Brussels they are thinking of using the social chapters of the treaty to introduce direct tax. Perhaps the Minister would like to comment on that, no doubt denying it strongly.

The longer-term necessity for the EU to harmonise and control national taxation lies deeper. The EU already has its own currency, as I mentioned, but it has no federal budget to speak of, and no currency zone in history has survived for long without the power to tax and distribute from its richer areas to poorer. One thinks here of the distributions from south to north in the United Kingdom and the federal budget in the United States. One remembers, too, the distributions from north to south in Italy and west to east in Germany, which the single currency with its single interest rate does not facilitate. We are already seeing strains in those and other euro economies. The euro was never an economic project. It was designed as the cement to hold the emerging megastate together but it will probably need a substantial federal budget to do so as time goes on. This amendment seeks to warn your Lordships about this position and to prevent it happening. I beg to move.