Toby on Tuesday

'Il Principe and the Pauper'

Last week I wrote about the creation of a European Army, the logical outcome of the 2007 Lisbon Treaty’s plans for an EU defence union.   And just after this month’s Referendum Frederica Mogherini, the EU’s High Representative for Foreign Affairs and Security Policy, will present her foreign and security strategy paper to the European Council.   We’ve a pretty good idea just what it will say, even though it is NATO and not the EU which has kept the peace in Europe since World War 2 .   And the reaction of our own heroic armed forces to being given their orders in future by an unelected Eurocrat, whose ascent to power came through Italy’s Communist Youth Federation, and not by the NATO command structure is just as easy to predict.   But today I want to write about another unelected Eurocrat, Mario Monti, former Prime Minister of Italy and now Chairman of the EU’s High Level Group on Own Resources.   His mandate is to increase the EU’s budget to deal with the Eurozone crisis, the migration crisis and the terrorism crisis.   And a fortnight ago the groundwork began for direct EU taxation across all 28 member states.

On 25th May, the EU’s Economic and Monetary Affairs Committee made an announcement which has received astonishingly little coverage and yet is crucial to all our futures.   For it called for every one of us to have a “European Taxpayer Identification Number” to keep track of every EU citizen.   In its own words, “Proper identification of taxpayers is essential to effective exchange of information between tax administrations.   The creation of European Taxpayer Identification Numbers (EU TINs) would provide the best means for this identification.   It would allow any third party to quickly, easily and correctly identify TINs in cross-border relations and serve as a basis for effective automatic exchange of information between member states’ tax administrations.”   In essence these EU National Insurance-style numbers would give Brussels the ability to track every EU taxpayer and lay the foundations for a new supranational direct EU Tax.   The report also calls for the EU to take over member states’ corporate taxation powers with a common corporation tax base.   The costs of the EU project are rising exponentially and Signor Monti is clearly looking to us all to bear them through some form of direct EU taxation.

And where the pure creative genius of Signor Monti’s plan lies is in its application to the Italian financial crisis, fast overtaking the Greek crisis as the point of maximum danger for the Euro project.   To say that the Italian banking system is on life support is an understatement.   17.9% of all Italian bank loans are in default, compared to 4.2% in France and 3.2% in Germany.   Italy’s largest bank UniCredit’s share price has fallen 40% so far this year and its chief executive has just resigned.   Trapped in the straitjacket of the Euro and unable to devalue, growth in the Italian economy has averaged just 0.2% a year since 1999.   Labour cost competitiveness has fallen by 30% against Germany’s since 1999.    Unemployment in much of Italy’s South is well over 50% and youth unemployment across the country as a whole is running at a tragic 37%.   Government debt is running at 134% of GDP.  Last year depositors in four small failed banks lost their life savings.   I could go on, but this is a country with an economy in disastrous freefall.   No wonder its former Prime Minister is looking to the EU, and not least to the two largest budget contributors Britain and Germany, to bail it out through some form of EU-wide direct taxation.

It was an earlier Italian politician, Niccolo Machiavelli, who declared, “If injury has to be done to a man it should be so severe that his vengeance need not be feared.”   Both Signorina Mogherini and Signor Monti seem to have taken to heart the counsel of old Machiavelli, the ultimate political manipulator.   By seeking to subsume our armed forces into an EU defence system, Britain’s capacity for self-defence will finally be made redundant.   And by imposing EU wide direct taxation to shore up the failures of the Euro in Southern Europe, the capacity of our own economy for sustained recovery will be at an end.   Of course, Italy should be allowed to restore the Lira, reschedule its debts and work its way back to growth, but that would be to question the whole Euro project itself.   Far better to call for “more Europe”, land the bill at the feet of those backsliding Brits through EU direct taxation and watch our pusillanimous politicians fall into line.   David Cameron has claimed that Britain will not have to contribute to future Euro bail-outs, but of course a system of direct EU taxation with transfers to Southern Europe would not count as a bail-out at all.   Old Machiavelli would have been hugely proud of Signor Monti – and of Signorina Mogherini – seeing them as pure geniuses in the very finest tradition of European politics.   And they have clearly learned their lessons from old Niccolo, the master himself! 

Until next Tuesday! 

Toby