Bureaucracy is the hidden Brexit threat

Bureaucracy is the hidden Brexit threat

The town of Roth in Germany had a nice tradition of asking children to hang messages for Santa on the town’s Christmas tree, writes Brian Keegan

That was, up until this year when the practice was threatened. The reason given was the EU’s general data protection rule: GDPR.

Obviously, the children were going to have to put their names and addresses on their messages to Santa, so the man in the red suit wouldn’t get confused on Christmas Eve and put the wrong presents down the wrong chimneys. Keeping Santa on the right track might have broken data privacy rules.

This was of course nonsense. There was no difficulty under GDPR in providing addresses like this, provided of course that the kids have permission from their parents. Nevertheless, here’s a sharp example of the old maxim that bureaucracy can be blamed for most things.

Watching the confusion across the water in the British parliament this week, it appears that blaming bureaucracy is popular in all walks of political life.

The European Court is a favourite target of the Brexiteers, fearful of how their rulings impinge on British sovereignty. Last week the same courts delivered, and in record time, a judgement which clarifies that the UK could unilaterally decide not to leave the EU after all.

However, it comes with the condition that the decision to rescind Brexit is taken before March 29.

The European courts can and do serve as a useful curb on the excesses of national governments. For example, the rulings of the European courts typically go in the citizen’s favour when it comes to tax matters.

From time to time individuals and businesses bring their cases before the EU Court of Justice to complain of unfair treatment under national law. Cadbury Schweppes successfully argued its entitlement to have a base in the IFSC in Dublin which could operate independently of its UK- based parent.

Marks & Spencer won its claim to have losses in a French subsidiary set off against profits which were being taxed in the UK. Nor is it just mighty multinational household names that take cases to the European courts against their governments, where local law seems to be in contravention of EU norms and understandings.

Individuals too, have at various times ensured that they can claim personal tax allowances against their income in another EU member state, or even that their lottery winnings would be tax-free as if they were living full-time in the country where they had drawn the numbers.

Bureaucracy has many drawbacks but at its best, it offers significant protection to citizens, as the European courts do, and will be essential to protect the interests of EU citizens and businesses in our future dealings with the UK.

One of the challenges of Brexit, hard, soft or otherwise which has yet to crystalise is the impact on bureaucracy.

We already know that our own civil service, between Revenue and other agencies, will be hiring about 1,000 additional staff to deal with the new restrictions and controls on trade between the UK and the rest of the EU.

This, in turn, will increase the impact of Brexit on business, which for many traders will be an exercise in managing complexity. The risk of bureaucratic overload is even greater because the likelihood of a no-deal Brexit is increasing.

A no-deal Brexit will both accelerate the introduction of trading controls and add to their complexity.

The Christmas tree in Roth is an extreme example of bureaucracy running out of control. That must not be allowed happen as we deal with Brexit.

- Brian Keegan is director of public policy and taxation at Chartered Accountants Ireland

More on this topic

Newspapers across Europe say focus is now on UK’s future relationship with EUNewspapers across Europe say focus is now on UK’s future relationship with EU

Johnson’s Brexit would shrink economy even after Trump trade deal – academicsJohnson’s Brexit would shrink economy even after Trump trade deal – academics

Charity: Cost of living could rise by €1,300 a year in event of hard BrexitCharity: Cost of living could rise by €1,300 a year in event of hard Brexit

Unrealistic for UK to complete trade deal with Brussels by end of 2020 – BarnierUnrealistic for UK to complete trade deal with Brussels by end of 2020 – Barnier