A warning from Apollo's birthplace
While admiring the magnificent view, we were all wondering where the city's inhabitants had gone. The opening night of the 2004 Summer Olympic Games meant we had the heart of Athens almost completely to ourselves.
The conversation shifted from doping and its detrimental effect on the popularity of the Games to ancient Greece with its impact on today's world. In true Socratic tradition, arguments were raised, counterarguments launched and positions backed with all available means.
And although nobody acknowledged defeat or retracted their case, regardless of the level of absurdity that any particular line of argument reached, the underlying theme that united all stands and emerged in the course of our conversation was that Europe owes more to Greek civilization than most - certainly more than the descendants of the Roman Empire are ever likely to admit.
Consider, for instance, the notion of a European Union of sovereign democratic states. The idea was actually first realized in Ancient Greece in 478 B.C. when the Delian League, a confederacy of the Greek states under the leadership of Athens, was inaugurated as an alliance against Persia. Most scholars view it as being the first serious attempt in European history of a large number of self-governing states at uniting in action.
What lessons does history have to offer? Do contemporary European politicians look back and take note of the past? These questions became ever so nagging after my return to the post-vacation reality of my clients' fiscal affairs. What does the future EU fiscal policy hold, specifically in view of EU enlargement? What will happen if the Polish corporate income tax rates rise, succumbing to pressure to harmonize equivalent EU rates as proposed by France and Germany?
With Greece in the spotlight hosting the Olympiad's return to its cradle, now seems like yet another opportune moment to revisit Europe's history and perhaps draw from lessons of the past.
The Old Old EU
The first union of autonomous cities was the aforementioned Delian League, initially founded as protection against the common danger which threatened the Aegean basin, i.e. Persia, and led by Athens due to its predominant naval power. The League's organization was the product of the new democratic ideal nourished by the Greek cities' yearning for independence.
The general affairs of the League were managed by a synod which met periodically in the temple of Apollo and Artemis at the island of Delos. Each state was required to pay in a contribution that, for some, was assessed in the form of ships, while for others it took the form of troops, weapons or money. Athens appointed a board to watch over and administer the League's treasury, which was kept at Delos for about 20 years.
During the first 10 years of its existence, the League achieved a number of major victories against Persia, as a result of which new members were brought into the League. Athens, as the chosen leader, and supported by the synod, enforced the contributions of ships and money according to the assessment attributable to each League member. Gradually, Athens emerged as the mistress of the Aegean, while the synod at Delos had become practically powerless.
Sparta, leader of the Peloponnesian League, had grown weary of the growth of the new 'Athenian empire.' The Athenians committed themselves to war with Sparta and its allies, at the same time launching a large-scale eastern offensive that attempted to secure control of Cyprus, Egypt, and the eastern Mediterranean.
Simultaneously, citing the danger of piracy or a Persian raid, the Athenians transferred the League Treasury from Delos to the Athenian Acropolis. The money collected would soon help build temples on the Acropolis, support the Athenian fleet and provide work for the citizens of Athens.
Nonetheless, great 'democratic' leaders are not flawless, as evidenced by historical records. Gradually, Athens lost its prestige as well as many of its alliances and, with the conclusion of the Peloponnesian Wars, the League came to an end.
So it would seem that history shows that alliances created for the purposes of ensuring security and free trade among member states have tumbled when one side has decided to take control and to dictate the rules of the game. Any union of states is a fragile political being that requires equal treatment and participation in the joint decision-taking process, especially with regard to the design of its fiscal system.
Back to the future
In addition to these historical and philosophical warnings, when dealing with the arguments to harmonize the EU's CIT rate, one must remember the Rome Treaty, which prohibits member states from intervening in other sovereign states' fiscal policies. This policy is always dictated by the individual state's economic needs and not those of its neighbors. In this context, threats to cut subsidies for new members undermine competition more so than any alleged 'fiscal dumping.'
A comparison of effective corporate tax rates across the enlarged EU versus the net corporate tax contribution expected to be made over the next decade by some Western European investors (e.g. car producers) who enjoy extended tax holidays in Slovakia, Poland and the Czech Republic says it all. We can only hope that history's not repeated in the new EU.
Donka Darpatova is a tax manager in the Warsaw office of Ernst & Young.
The conversation shifted from doping and its detrimental effect on the popularity of the Games to ancient Greece with its impact on today's world. In true Socratic tradition, arguments were raised, counterarguments launched and positions backed with all available means.
And although nobody acknowledged defeat or retracted their case, regardless of the level of absurdity that any particular line of argument reached, the underlying theme that united all stands and emerged in the course of our conversation was that Europe owes more to Greek civilization than most - certainly more than the descendants of the Roman Empire are ever likely to admit.
Consider, for instance, the notion of a European Union of sovereign democratic states. The idea was actually first realized in Ancient Greece in 478 B.C. when the Delian League, a confederacy of the Greek states under the leadership of Athens, was inaugurated as an alliance against Persia. Most scholars view it as being the first serious attempt in European history of a large number of self-governing states at uniting in action.
What lessons does history have to offer? Do contemporary European politicians look back and take note of the past? These questions became ever so nagging after my return to the post-vacation reality of my clients' fiscal affairs. What does the future EU fiscal policy hold, specifically in view of EU enlargement? What will happen if the Polish corporate income tax rates rise, succumbing to pressure to harmonize equivalent EU rates as proposed by France and Germany?
With Greece in the spotlight hosting the Olympiad's return to its cradle, now seems like yet another opportune moment to revisit Europe's history and perhaps draw from lessons of the past.
The Old Old EU
The first union of autonomous cities was the aforementioned Delian League, initially founded as protection against the common danger which threatened the Aegean basin, i.e. Persia, and led by Athens due to its predominant naval power. The League's organization was the product of the new democratic ideal nourished by the Greek cities' yearning for independence.
The general affairs of the League were managed by a synod which met periodically in the temple of Apollo and Artemis at the island of Delos. Each state was required to pay in a contribution that, for some, was assessed in the form of ships, while for others it took the form of troops, weapons or money. Athens appointed a board to watch over and administer the League's treasury, which was kept at Delos for about 20 years.
During the first 10 years of its existence, the League achieved a number of major victories against Persia, as a result of which new members were brought into the League. Athens, as the chosen leader, and supported by the synod, enforced the contributions of ships and money according to the assessment attributable to each League member. Gradually, Athens emerged as the mistress of the Aegean, while the synod at Delos had become practically powerless.
Sparta, leader of the Peloponnesian League, had grown weary of the growth of the new 'Athenian empire.' The Athenians committed themselves to war with Sparta and its allies, at the same time launching a large-scale eastern offensive that attempted to secure control of Cyprus, Egypt, and the eastern Mediterranean.
Simultaneously, citing the danger of piracy or a Persian raid, the Athenians transferred the League Treasury from Delos to the Athenian Acropolis. The money collected would soon help build temples on the Acropolis, support the Athenian fleet and provide work for the citizens of Athens.
Nonetheless, great 'democratic' leaders are not flawless, as evidenced by historical records. Gradually, Athens lost its prestige as well as many of its alliances and, with the conclusion of the Peloponnesian Wars, the League came to an end.
So it would seem that history shows that alliances created for the purposes of ensuring security and free trade among member states have tumbled when one side has decided to take control and to dictate the rules of the game. Any union of states is a fragile political being that requires equal treatment and participation in the joint decision-taking process, especially with regard to the design of its fiscal system.
Back to the future
In addition to these historical and philosophical warnings, when dealing with the arguments to harmonize the EU's CIT rate, one must remember the Rome Treaty, which prohibits member states from intervening in other sovereign states' fiscal policies. This policy is always dictated by the individual state's economic needs and not those of its neighbors. In this context, threats to cut subsidies for new members undermine competition more so than any alleged 'fiscal dumping.'
A comparison of effective corporate tax rates across the enlarged EU versus the net corporate tax contribution expected to be made over the next decade by some Western European investors (e.g. car producers) who enjoy extended tax holidays in Slovakia, Poland and the Czech Republic says it all. We can only hope that history's not repeated in the new EU.
Donka Darpatova is a tax manager in the Warsaw office of Ernst & Young.
