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Nadhim Zahawi portrait

Nadhim Zahawi is a member of the Foreign Affairs Select Committee and MP for Stratford On Avon.

During these weeks following the EU referendum, I have made a conscious effort to remain quiet on the subject. Everyone needs to respect the fact that, although the result was decisive, and the wishes of those who voted to leave the European Union must be delivered, there are large numbers of people in the country who have been bitterly disappointed. Now is not the time for gloating. Now is the time for a capable Government to seize the chance to deliver a better Britain for everyone, outside the EU. However, two pieces of news in the last week demonstrate why I remain convinced that we made the right decision to leave, and have brought me back to the topic.

The first was the decision by the European Union to punish Ireland, an independent sovereign state, over the amount of tax that Apple has paid, and to demand that the company must pay an extra €13 billion. During the referendum, if you discussed how the EU wants to centralise more power, and how it now wishes to make more active use of the powers it already has, you were accused of pedalling conspiracy theories. Sadly, some vigorous opponents of the EU do indeed slip into hyperbolic fantasy, which is both damaging and unnecessary: reality is enough to illustrate this meddling. The events of last week show the complete lack of respect that the European institutions feel for the democratic member states from whose agreement they derive their paltry democratic legitimacy.

Both Apple and Ireland believe that the laws of that country have been followed, and that every penny of tax that was due has been paid. That should be the end of the matter. It is not for the European Union to decide what tax rates should be levied, or whether all of the tax that Apple is liable for in Ireland has been paid. That is entirely within – and should always be entirely within – the remit of the democratically-elected Government of Ireland.

Some have welcomed this decision as a blow against the multinational corporations that seem to do anything to reduce their tax liability, to the detriment of society as a whole. But that misses the point. Whether you believe that Apple should pay nought per cent, 20 per cent or 80 per cent of its profits in tax, it is for the people of Ireland to decide. If they believe that these companies are not paying enough, then they should vote a party that will take action into government. That is how democracy works – not through diktat from Brussels but via decisions of a Government accountable to the people.

This is a clear example of overreaching by Brussels, and one that damages the attractiveness of the European Union as a place to do business. Businesses need to know what the tax structure is that they are working within, whatever it is. There is now the fear that, even when a sovereign member state sets its tax rate, and you pay what you owe in full, in a few years’ time the European Union will decide you didn’t pay enough and then retrospectively hit you with a huge bill.

The second piece of news was that Matthias Fekl, France’s Trade Minister, has described TTIP as ‘dead’, and has called for talks to end. Francois Hollande has so far not been as certain as his colleague, but did say that an agreement was impossible by the end of this year, and that France would not accept the current deal. 
During the referendum, we were often told that remaining in the European Union was necessary to give us negotiating clout, and sign up to free trade deals. If the European Union did perform this role even close to adequately, and forged ahead with free trade deals around the world, then that would be brilliant. Unfortunately, the European record on trade has shown that there is no hope of that.

European trade deals suffer because they show that despite the many similarities with our friends in Europe, the members of the European Union still have huge differences economically and politically. It is almost impossible to negotiate a deal that encompasses the different requirements and priorities of economies as different as Britain and Bulgaria, Germany and Greece, France and Latvia. It is a difficult job, and at best a long and complicated one.

The problem is that, because of this diversity, Brussels must keep all 28 countries onside and happy with the deal while negotiating with another single country that must only please itself. This fractured negotiating position inevitably undermines the process. It is hard to see how the United Kingdom could not do better than this. It will not be easy, but I have much greater faith that our Government could deliver a deal when it only has to consider the interests of our own economy.

I am delighted that the British people voted to leave the European Union, and there is much work to do, especially in creating our new relationship with the EU. However as the economic news gets better, particularly in comparison to the rest of the world, it is certainly becoming ever clearer that remaining was always going to be the worse option. We still have to take the opportunities on offer, but if we do our future will be brighter outside.

32 comments for: Nadhim Zahawi: Apple’s tax and TTIP’s collapse both show why Britain was right to back Brexit

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