# Lisbon Treaty and the Economy



## ccbkd (13 May 2008)

I have decided at a broad level that a Yes vote would be beneficial for Economic growth in the long term in this country.. Firstly I think we  are creeping closer towards a US style federal state system (albeit more culturally diverse) the Lisbon treaty from what I know of it is a more higher profile push towards this type of union, previous moves such as single currency, freedom of labour movement, and linked interest rates just cement this view..It will read quiet easy in 20 years time, people are confused because of the uncertainty change sometimes brings..but I think when we look back in the future  it will make perfect sense


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## Purple (13 May 2008)

The main economic reason espoused by the No campaign for opposing the treaty is the issue of tax harmonisation or, more specifically, corporation tax harmonisation. The fact is that we have a veto on tax issues and this is being protected. The other thing to consider, and this is more important, is that EU countries can implement multilateral taxation agreements which would require corporation tax to be paid to the country in which the economic activity took place (the country in which the goods or services were sold). This is what the French want and what the British oppose and what our veto is all about. While we can block there laws being enacted at an EU level we have no control over what is done on a unilateral or multilateral level. We could take a case to the European court saying that such agreements restrict the free movement of goods and services and in effect undermine the single market but that would have nothing to do with the Nice treaty or any veto.
If the French and Germans get what they want, which is to stop Ireland stealing their tax revenue, our economy would be wiped out. I consider this to be the single biggest threat to our economic future. I also recognise that it the Nice treaty has no bearing on it one way or the other.


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## Caveat (14 May 2008)

Good post Purple - David McWilliams was making these very points on Today FM this morning too.


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## michaelm (14 May 2008)

Purple said:


> . . the Nice treaty or any veto . . . I also recognise that it the Nice treaty has no bearing on it one way or the other.


You meant Lisbon not Nice, right? or am I stupid? (not mutually exclusive ).


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## Purple (14 May 2008)

michaelm said:


> You meant Lisbon not Nice, right? or am I stupid? (not mutually exclusive ).


 Yes, my mistake.


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## ivuernis (14 May 2008)

Purple said:


> The other thing to consider, and this is more important, is that EU countries can implement multilateral taxation agreements which would require corporation tax to be paid to the country in which the economic activity took place (the country in which the goods or services were sold).



Isn't this what VAT is for? Aren't they in essence saying that to combat Ireland's low corporate tax they would have to increase VAT?



Purple said:


> If the French and Germans get what they want, which is to stop Ireland stealing their tax revenue, our economy would be wiped out. I consider this to be the single biggest threat to our economic future. I also recognise that the _Lisbon_ treaty has no bearing on it one way or the other.



Looking at a FinFacts article from last year on Ireland's tax regime I though the following statement sums up our EU membership / tax status relationship very succinctly:

_"We have been very lucky that the funding members of the European Union, principally Germany gave us about €36 billion in aid with few strings attached."
"We were simply lucky that they were stupid."_

or, we were clever. Either way, you can understand their reasons for being a bit miffed with our taxation rates.


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## Purple (14 May 2008)

ivuernis said:


> Isn't this what VAT is for? Aren't they in essence saying that to combat Ireland's low corporate tax they would have to increase VAT?


 VAT is paid in the country that the business is registered in. If IBM Ireland (for example) does business in Germany they pay tax on that business in Ireland. It’s more of the same thing.



ivuernis said:


> Either way, you can understand their reasons for being a bit miffed with our taxation rates.


 I agree. We do not occupy the moral high ground on this issue.


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## Duke of Marmalade (14 May 2008)

We're a tax haven, specially for the Yanks. "Yes" to Lisbon makes it more difficult to remove that status. "No" would be an open door to those who want to cut us down to size. Best of all is a Yes but only marginal, keep them on their toes.


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## leahcim (20 May 2008)

> VAT is paid in the country that the business is registered in.




I don't think this is correct.

AFAIK VAT is paid in the country where the product or service is bought.
If a company registered in Germany sells a product in Ireland the German company must collect VAT at the Irish rate from the consumer (if VAT is applicable) the German company must then submit the VAT collected to the Irish exchequer.

Even if the company supplying the product or service is outside the EU they are supposed to do this.

This is how it works for software sold over the Internet, I am assuming the same applies to other goods.

Here is an article discussing this.
http://www.avangate.com/articles/software-vat-123.htm


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## leahcim (22 May 2008)

I stand corrected. Thanks for explaining how it works cerbera1.


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