Thursday, February 15, 2007

William Tell rides again

Well, OK, maybe he shoots apples again. Whatever it is, the Swiss are once again proclaiming their right to run their own country as they see fit, which includes the various cantons setting their own tax levels. And guess who does not like it. Yes, that's right the EU Commission.

We have followed the saga of the Commission's spat with Switzerland about those taxes and have noted that a number of firms have decided to move to Zürich to take advantage of the fiscal atmosphere.

As the BBC reports, the Commission (for some reason, with a small ‘c’) has decided to get tough.
The commission said the tax breaks were "unfair" as they differentiated between domestic and foreign income sources.

However, Switzerland said the argument was "unfounded".

There were no regulations between Switzerland and the EU on harmonising tax arrangements, so it was impossible to infringe rules, the Swiss government said.
Well, of course, it's unfair. I mean, here are the Swiss, letting their cantons decide on levels of taxation, exercising local democracy rather than subsidiarity; and here are the cantons setting tax levels that would be attractive to businesses. Sheesh! How unfair can you get?
"Switzerland enjoys the benefits of privileged access to the internal market and must accept the responsibilities that go along with this," said EU external relations commissioner, Benita Ferro-Waldner.

"The decision the commission has taken is not about tax competition, but about the state aid undermining the level playing field necessary for partnership and trade relations between Switzerland and the EU."
Actually, she is wrong. This is about tax competition – an unfair concept for the EU.

The Commission has warned Switzerland to stop undermining the EU's own high-tax economy (as if it needed outsiders to undermine it) and stop cantons from setting their own, advantageous levels. It is not, however, clear what the Commission will do, if Switzerland refuses to comply with these demands.

Will the European Rapid Reaction Force invade the country? I wouldn't advise it. Despite falling off Machiavelli's standards a bit, they remain "armatissimi e liberissimi" – most armed and most free.


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