The EU and your taxes

Most people don't have a problem with EU rules on not subsidising favoured industries, in fact it is one of the few worthwhile bits of the Single Market. If, to draw a nationality at random, the French want to subsidise their pharmaceuticals companies, they are not allowed to because it gives an unfair advantage over other European pharma companies.

Now have a look at what is happening in Gibraltar. The new finance measures involve eliminating profits taxes on offshore companies: that is to say that profits taxes are only charged on companies actually working in Gibraltar with employees there (the offshore companies have to pay other charges and these are presumably enough).

The European Commission have decreed that this is in effect a subsidy.

So not charging taxes amounts to a subsidy. How much tax would you have to pay before it wasn't a subsidy? You will remember that the French have tried to ban Ireland from having a low corporation tax rate in order to attract businesses and jobs. In a sense that was understandable (although wrong) because Ireland was being bailed out by, in part, the French.

But Gibraltar is not in receipt of such handouts. Why shouldn't it be able to set its own tax rates? 

The answer is that Spain, which is next to Gibraltar, has received the assurance, in return for something else, that the EU will oppose this (Spain doesn't want companies finding it cheaper to set up on the southern tip of the peninsula). That is the grubby way the EU works: secret backroom deals favouring the bully boys.