Airstrip One

Cato on the Withholding Tax - 25th June 2003, 23.35

In a strong if slightly overwrought article, the Cato Institute clarifies the lack of intellectual merit behind the withholding tax, and permitted information gathering, agreed on June 3rd. It is a great pity that none of these economists are actually cited.

More objective and competent economists have clearly demonstrated that the concept of "harmful tax competition" is without intellectual merit, particularly given that most countries have taxes far above the revenue and growth maximizing rates, so tax competition can only be beneficial.

However, the article goes downhill by linking an incompetent policy on tax to an ideological construct of 'Europe' that wishes to enforce French levels of taxation across the globe:

Most people understand that when businessmen get together to limit competition, the public interest is rarely served, and the same is true of government bureaucrats. EU officials convinced their bureaucratic lackeys at the Organization for Economic Cooperation and Development (OECD) to develop the concept of "harmful tax competition" to justify trying to force all of the world's countries to jack up their tax rates to French-like levels.

Primarily, it is an example of where Europe has strayed from the path of liberalisation. The withholding tax is an example of high tax countries attempting to prevent their citizens accumuulating capital or property by transferring their capital to low tax jurisdictions. The single market was supposed to be about competition, not standardisation, and the concentration on rules at the expense of markets has retarded any economic impetus that the process may have brought.

Every European citizen has a duty to disregard, undermine and evade this tax.