European identity: Taxation with Representation

2012-04-03

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Regardless of ideology, we Europeans more or less agree that the current order of the European Union is suboptimal. We all identify numerous flaws and wish to see reforms in many areas either that be the (growing) democratic deficit, or the distance EU institutions, except Parliament perhaps, have from the desires, motives and scrutiny of the citizens; or even the bureaucratic sclerosis in all Community affairs; among many others.

The midpoint of these issues is the fact that the EU is not a state but rather a political UFO that has evolved into its current form through decades of incrementalist integration. Though many steps can be made to improve each of these flaws, it is widely accepted that the establishment of a political union in Europe – a genuine state, regardless of actual form – would have been the single most important step forward. Yet it is undeniably true that a political union cannot be established for as long as the conditions are not mature enough and for as long as crucial prerequisites are completely absent.

Apart from the diplomatic and legal work, two are the necessary elements the EU must have to move towards real political integration: (1) a European public sphere, (2) a European identity. Within the context of this article I shall be elaborating on the concept of a European identity and how that can be gradually brought into being through tax policy.

Before the American revolution, some time in the 1750s, the Americans had established the well-known Bostonian principle of “No taxation without representation”, which basically argued that it was unacceptable to pay taxes to the then Imperial Great Britain, without the Americans having any say over the way their taxes would be used. The Americans were asking for the right to to be represented at the centres of power where their taxes were administered.

By reversing this principle we come up with the idea that people will sooner or later ask for fair representation in the administration of their taxes, for the mere reason that people care for their money as they know they worked hard to get it and are willing to go to any length to ensure their rights over it. This is after all the kind of “social contract” that democracies establish, whereby the state is given the absolute power (sovereignty) to tax its subjects/citizens and in return the citizens have the power to elect their representatives in government so as to control the use of these taxes (among others). In that sense one could go as far as to argue that taxes build states and taxes are the single most important force that forges identity and affection to an authority (of course there are many other ethnic, cultural, historical, linguistic issues, yet this does not change the dynamism of taxation in that sense).

With this in mind one could explain the reason why Europeans are not particularly interested in the EU, since there really isn’t any omnipotent authority in Brussels actually using their taxes. In other words there is no European state or other political entity with the sovereign power to impose taxes on the Europeans. Had there been such an authority, or had there been direct taxation from Brussels, sooner or later citizens would start showing interest in it, to see how their money is spent – to judge whether they are getting a good deal out of taxation. Gradually this interest would identify the democratic and other flaws of the Union and would eventually force Europeans to ask for “Taxation with Representation”. This would then put magnificent pressure for thoroughgoing reform in the institutional order of the EU towards a much more democratic, accessible, transparent and open political union.

For as long as European institutions are seen as the assignees of member-states, people will never show real interest in the EU. After all who would ever feel any sentiment of belongingness to a “Commissioner” or a “High Representative of the EU”? I am not implying anything about the people who currently are in charge of these offices/institutions, I am only saying what every European really feels – that no one actually cares about a detached bureaucracy. To make Europeans care you must make it clear and above board that you are taxing them, that you are getting into their pockets, since that is the “sweetspot” of every individual and direct taxation is the easiest and most effective way to do it. Note though that I am not arguing in favour of more total taxes, but for a redesign of the Community’s “own resources” so that the bulk of them derives directly from the citizens, thus giving a political dimension to the issue.

Taxes build states and create a connection between the sovereign/authority and the people. Once there is such a connection in place there will gradually be more interest from the side of the citizens that will fertilise the ground for a European identity and create a leverage for the radical reformation of the institutional order of the EU, into a truly democratic political entity. This creates a domino effect that will produce public discussions on European politics, thus giving birth to the much-needed European public sphere.

In my view the power of money, of taxation in particular, is significant in forging a European identity. And by identity I am not speaking of a “national identity” that will replace the existing ones – that is both unfeasible and undesirable. I am referring to a parallel identity that will make citizens feel also European, something quite important in the modern and future world.

Finally to illustrate my point, one of the positive aspects of the economic crisis has been the increased interest of citizens in European and cross-country politics. You know why? Because they realised that they are paying for their partners – they understood that their money is involved. Multiply this and visualise what I described above and your get my gist. People care about money and once you tax them you draw their interest, which will eventually produce all the other elements a political union must have. Hence “Taxation with Representation” could be the slogan that will produce the necessary power impulse for reform.