Would Parliament Retain its Power to Tax and Spend if Britain Participated in a European Monetary Union?

Abstract

My answer to the above question is yes. There is no such thing as total freedom of taxation and spending. No parliament enjoys that freedom. Parliament takes fiscal decisions within the framework of an assessment of many political, social and economic factors. Principal among these is the macroeconomic situation, partly with reference to permanent or structural objectives such as levels of VAT and corporation tax, the level of taxes on investment income, the size of the budget deficit and so on, and partly with reference to the business cycle. The problem is to know how this macroeconomic assessment is made, and the part foreign influence plays in it.

1. Remarks at a seminar of the Action Centre for Europe, House of Commons, 11 May 1995.