The implications of the Irish ‘No’ Vote in the referendum on the Lisbon Treaty are various but there is one message arising from it that the Bulgarian Government would be wise to review carefully.
Hidden away in the verbose legalistic prose of the treaty is the foundation and framework for tax harmonisation across the EU.
The Irish are a very shrewd nation and know that their national economic success over the past 20 years is based not just upon EU Funding but upon that funding being interwoven with a progressive and modern tax regime which has presented a low level corporation tax regime designed to attract high levels of Foreign Direct Investment from both the EU and, most particularly, the US. This policy has been a resounding success.
Among several factors affecting the Irish people’s vote was the fact that the Irish, late in the campaign, were made aware of the potential forced change to their tax system taking from their country the largest competitive edge they have over many EU countries with their veto in this area being lost. If you have any doubt over this Trojan Horse policy of tax harmonisation buried deep in the Treaty, ask the French finance minister who has unequivocally confirmed the reality of this intended policy development in recent months.
This policy is being championed by France and Germany who do not have the flexibility to reduce corporate tax themselves due to the financial demands of their over bloated and archaic welfare systems. They cannot therefore compete, as they would wish with new members, such as Bulgaria, which offer attractive tax regimes to encourage foreign investment in their latent economies.
For Bulgaria to succeed in developing its economy it is essential that it is able to continue to offer such incentives. Mr Stanishev and his coalition understandably pushed through ratification of the treaty in the spring to show Bulgaria’s adherence to the values of the EU family. In return they are faced with threats to reduce or freeze EU funding to Bulgaria because of the prevalence of corruption and organised crime in the country. No-one doubts the reality of that prevalence but, in his quite eloquent defences of the Bulgarian Government's attempts to manage these issues Mr Stanishev cannot, due to political protocol, ask of the EU and in particular its older members not to criticise Bulgaria until they have their own houses in order. Let us look at the past decade:
Italy: A prime minister, faced with severe criminal charges, who forces through legislation under statute of time limitation to ensure these charges lapse. Organised crime on a scale that not only results in toxic waste on the streets of Naples but the regular assassination of members of the judiciary.
United Kingdom: The cash-for-honours crisis and corruption accusations relating to BAE Systems and Saudi Arabia suppressed under spurious precedents of national interest.
Ireland: Almost half of the political elite found to have offshore tax-haven bank accounts.
France: The recent president Jacques Chirac under serious investigation as to his financial affairs while mayor of Paris trying to hide behind immunity
Germany: Widespread tax evasion discovered by way of investigation into Lichtenstein secret bank accounts.
So, Mr Stanishev, fight your corner but remember, when the Irish have another referendum next spring with a tax opt-out, Bulgaria will be faced with a threat to its future financial prosperity. Unless you can combine with other ‘junior’ states who look to attract FDI by way of progressive tax regimes, such as Latvia, you will be looking Sarkozy and Merkel in the eye to prevent a funding freeze while a faceless, unelected, member of the Brussels political elite will be stabbing you and Bulgaria in the back.
It is just possible, Mr Stanishev, that your government has not yet passed Bulgarian ratification papers to Rome, the final stage in the ratification process? If not, then you have a tungsten-like bargaining tool. I hope for the sake of your government and country that is the case.
Eric Crane, Sofia
ecraneuk@aol.com
