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Wednesday, February 13, 2013

Every little helps: The reintroduction of EU civil servants' "special levy" is small step in right direction

The reintroduction of the EU's special levy tax is good news
In all the discussion of the EU budget for 2014 - 2020 there is one small item that has been overlooked - the welcome reintroduction of the special tax levy on EU officials' pay. In 2012 this was set at a rate of 5.5% on post taxed income but this lapsed in 2013. It will now reappear in 2014 as a part of measures that are hoped will keep the costs of the EU's bureaucracy under control.
The European Council Conclusions here say that "the new solidarity levy will be reintroduced at a level of 6% as part of the reform of the salary method. These measures will have a significant impact on the cost for pensions in the mid- and long-term."

This is welcome news, although, even with the reintroduction of the tax, EU civil servants will still pay far less tax than the EU citizens they serve. Let us hope that MEPs do not seek to show their own type of solidarity by attempting to remove it. Over to you Mr Schulz.


Jesper said...

How will the levy affect the defined benefit pensions?

Will pensions remain based on the salary or will pensions be net of the levy?

My guess is that the levy will not be taken into account when calculating the defined benefit pension payout.
If so, then that would mean cutting the wages for the ones working while leaving pensions completely untouched. Are they recommending countries to follow their lead on this or is this one of those: 'Do what I tell you to do, don't do what I do.'

Youth might be wasted on the young but the old don't waste their power ;-)

Anonymous said...

The purpose of overpaying the Eurocrats is to maintain a large corpus of people financially interested in keeping the EUSSR in existence, despite it obvious tyrannical nature.

That's the major reason Draghi is calling for thousands of more ECB "employees."

Totalitarian governments often over-bloat their bureaucracy, creating a layer of gravy train riders that serve as a protective barrier between the self-appointed political elite controlling the state and the people being controlled.

This is classic tyranny.

Rik said...

Basically good news for Dave. He simply needs until his credibility re this iissue is restored occasionally an event in which it is shown that the EU (whichever part thereof is in principle irrelevant) opposes things the UK public (or large aprts thereof want or want to push stuff through the UK populations throat.
Just to show that they suck (so the EU issue remains top of the agenda) and he is fighting for Brittain (bring home these kind of results.
Which works pretty well. This is also an issue that fits perfectly in that mold. Combined with the fact that the end result is extremely likely 'a result' for Cameron.
In this respect people like Schultz are doing a better PR job for him than a lot of members of his own party.

Same with the EP on the budget itself.

Rik said...

Probably also worth a try. Direct the EP more to the allocation of the budget than to the height thereof.
On the total amount of money issue they are much more likely to face stiff competition from everybody else involved and likely will shoot themselves in the foot at least in the whole North with politicians but also with the population there.
The allocation is however an issue every reasonable person can have problems with. basically that it is a 19th-20th century budget iso a 21st one. So sounds better in general terms, ..sses much fewer people off and even could get some support.

That would be my battle if I were the EP. No good to take the other battle on as you are likley to lose even on more fronts (issue itself and the popular support/platform).

They are however summarised a bunch of morons so we have to see how they will react. Most of the things they do especially in the communication with what should be their voters is beyong moronic. And react somewhat longer term, initial reaction one can expect to be negative. But the secret ballot and that kind of stuff is too stupid and wrongly focussed for words.
Should go smoothly or it is likley better to have them shoot themselves in the feet. But worth to keep an eye on if the possibility arises.

Anonymous said...

"EU civil servants will still pay far less tax than the EU citizens they serve"

Uhm, that is no true. The 'normal' EU tax on salary is 8% to 45%, plus 6% on top of that i.e. 14%-51%. There are no deductions for kids, mortage etc. Substantial part of EU employees is local (=mostly Belgian) and get no expat etc. Some EU countries have flat-rate income tax -with deductions- of 10%, 15% or 16%. Everybody there pays effectively less than a Eurocrat.

Moreover, EU tax may be relatively low, but other deductions -like pension contribution- often exceed, sometimes by far, those paid nationally, often both in public and in private sector.

As remarked elsehere, the true test of attractiveness is number of applicants from better-off Member States. Failed since 2004 Kinnock Reform.

mike said...

Eurocrats live and work in Brussels. Therefore, they should be compared with Brussels natives in the first place.

A Eurocrat earning € 7,600 per MONTH pays an overall tax rate of 11%.
Anybody working in Brussels and earning € 23,900 per YEAR (thus 3 month’s wage of abovementioned Eurocrat) already pays an overall tax rate of 28% !

Only Eurocrats earning more than € 6,938 per MONTH reach a 45% tax rate.
Anybody working in Brussels earning more than 18,730 per YEAR reaches this point.

On top of this, Eurocrats enjoy a series of hefty fees (e.g. 16% and 5% of salary for expatriation and lodging respectively) that are all tax-free!

The 6% solidarity levy nowhere comes near to 6% of salary. It is calculated on basic salary excluding social security and pension contributions. The 6% is applied to the part of basic salary that exceeds € 2654. Per month, that is!

Eurocrats also enjoy cheap mortgage rates. They have pushed generations of Brussels natives out of the city.

Jesper said...

One of the anonymous comments made me think of this oldie: