World Taxpayer Groups Join to Fight Higher Taxes

The earliest recorded tax occurred in ancient Egypt around 3000 BC and was in the form of portions of peasants’ crops and pieces of papyrus. Taxes aren’t new, but neither are taxpayer protection groups whose job it is to stand up for hardworking families and hold the government accountable for the tax dollars it spends.

At the end of May, taxpayer groups from around the world will meet in Kiev, Ukraine for the World Taxpayers Association meeting. Participants will discuss a wide range of issues, including the best way to get their pro-taxpayer message to the public and media and how to work together to combat the threat of higher taxes from international bodies.

Proposals by the European Union and United Nations, including further tax harmonization (which would require uniform tax rates), the introduction of a Financial Transaction Tax, and the Solidarity Tobacco Contribution, would add to the tax burden of everyone in Europe. These tax changes are intended to level the economic playing field among member states and to fund social programs throughout the world. In reality, they hinder the economic growth of nations and contribute to the growth of unaccountable international organizations.

At present, tax harmonization in the EU is largely restricted to that Value-Added Tax (VAT) and tariffs, but harmonization of corporate taxes have long been on the agenda in Brussels ever since Ireland first implemented their radical tax reforms in the late 1980s. In reality, tax harmonization eliminates fiscal competition. Tax competition lowers taxes by shifting capital and/or labor from an area with high tax burdens to one with a lower burden. Tax competition will send a clear signal to wasteful and inefficient governments that their high tax regimes and profligate ways will not be tolerated or rewarded.

The Financial Transactions Tax, which gained popularity following the financial crisis and is also known as the Tobin Tax, has been proposed in various guises over the past few years. One model, proposed by the UN, is a world tax imposed on all financial transactions, with the goal of funding a global model of social services that will provide “needy people” with a basic income, free healthcare, education and housing.

While helping others is the professed goal of the program, many have speculated the tax is actually attempting to make the financial services industry pay for its role in the recent economic crisis. But as Charles Goodhart, an economist at the London School of Economics, points out, “The Tobin tax is a bad idea, since it would greatly increase both the costs and volatility of foreign exchange dealing and throw a huge spanner into the workings of the global financial economic system.”

A less discussed transactions tax is being proposed by the World Health Organization (WHO) and could have a serious impact on nations across the globe, including the United States. WHO is proposing a $.05, $.03, or $.01 cent tax on tobacco products, depending on the wealth of the country where the products are being sold. This is being done with no regard to the potential economic impacts of such a policy. Even WHO documents strongly discourage countries to allow concerns about the inflationary impact of higher taxes to deter tax increases.

Creating revenue for social services by implementing a new tax simply hasn’t worked in the past. Funded by a tax on French airlines, UNITAID was created in 2006 to contribute to scaling up access to treatment for HIV/AIDS, malaria and tuberculosis. Unfortunately, UNITAID has high overhead and its executive director (a former French official who was the one who introduced the tax when he was in office) collects a big salary.

UNITAID has been accused of lacking transparency, holding major conferences for unknown costs   and failing to react to the risks of corruption and theft. 

Above all, given its status as an international organization, the WHO refused to communicate its audit reports concerning UNITAID to the Cour des comptes [a French quasi-judicial body conducting financial and legislative audits of public institutions], leading the magistrates to issue a reservation.

All these attempts at establishing international tax regimes should be resisted. The EU and UN are not accountable in the same way that national governments are. In democracies, taxpayers can vote periodically against high tax governments. With international institutions, there are fewer checks and balances. This is why we are urging taxpayers from across the world to resist tax harmonization and new taxes cooked up by unaccountable non transparent international bodies.