Brown pledge to veto EU tax harmony

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The Independent Online
GORDON BROWN, the Chancellor, was yesterday a signatory to a new centre-left agenda for European economic policy, joining calls for more job creation and greater harmonisation of policies.

Mr Brown, who attended a meeting of socialist ministers in Brussels yesterday, endorsed a strategy document, demanding "full employment" and greater cross-border economic coordination.

However, he warned that that Britain will veto any moves towards tax harmonisation across Europe.

He said the Government would not allow Brussels to take decisions on taxes, as these were a domestic issue which must remain under the control of national authorities.

The document, The European Way, includes a commitment to closer economic co-operation, with jobs and growth given priority alongside fighting inflation. And it gives the Left in Europe an opening to press for tax harmony across the 15 member states. Now the tussle begins on how far national economic policies should be allowed to merge, with Mr Brown and the Prime Minister determined nothing must threaten low inflation and prudent budgeting.

Others, including German finance minister Oskar Lafontaine, see the chance to steer jobs and growth policy using the European Central Bank and to press for a centralised tax regime as the logical next step after the launch of the euro next year.

But Mr Brown, who attends a routine meeting of all 15 EU finance ministers today, insisted: "We have a veto and we will use it of necessary."

Mr Lafontaine's determination to see EU tax harmony is at odds with his leader Gerhard Schroder, but is supported by French finance minister Dominique Strauss-Kahn.

The first pressure for EU control of direct taxation came last summer, when Austria launched talks on setting an EU-wide tax on all savings and investments held in any of the member states.

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