Europe's remorseless quest for tax harmonization shows no sign of abating. The EU already has an agreed minimum VAT rate of 15% and the European Commission is currently seeking to harmonize taxes on corporate income, tobacco, energy and digital products. It has also won a WTO ruling to end tax breaks for U.S. companies competing in foreign markets.
Its latest tax-harmonization initiative - the Savings Tax Directive - seeks to obtain wide international agreement on the need for collecting and swapping confidential financial data on nonresidents. This would enable high-tax nations such as France and Germany to tax outside their borders and would go a long way toward creating a global tax cartel - or what one U.S. commentator has described as "a kind of OPEC for politicians."
The EU, of course, lacks direct means to influence tax rates outside its borders. But the Savings Tax Directive will give participating states the means to impose home-country taxes on citizens regardless of where they save or invest.
In order to make everyone comply with the terms of the directive, big EU states such Britain have subjected small tax jurisdictions such as the channel islands of Guernsey and Jersey to a shameful campaign of hectoring. (Britain is far from being enthusiastic about the scheme but wishes to appear "a good European." ) After holding out over many months the two British dependencies have effectively given in. Much more crucial to the success of the scheme is the participation of Switzerland and the U.S. For that reason Switzerland has been coming under mounting pressure to participate.
Talks between the commission and the U.S. government have been proceeding ove