Commentary: Lamont plays to the Brussels rules
Wednesday 01 July 1992
At first the row between Britain and the rest over VAT is like one of those disputes among medieval theologians. Nothing would actually have forced Britain to change the way it raises VAT. The standard rate of 17 1/2 per cent would remain, and so would the right to retain politically sensitive zero rates.
All Britain's partners wanted was to make it illegal for an EC country to cut its standard rate below 15 per cent. The sensible reason for this proposal is simply fear of 'fiscal dumping', in which countries in a borderless Europe would try to attract customers from their neighbours by charging less VAT. The result would be plunging state revenues and soaring deficits. The new minimum rate also helps EC member states to do what many of them need to do anyway, which is to raise more tax.
Happily, the Chancellor, Norman Lamont, has climbed down from what always appeared a quixotic position, namely that any minimum tax rate was an
unwonted interference in the sovereign rights of nation states. Forced to choose between a duff issue of principle and practical questions such as the discriminatory treatment of whisky, a subject close to any Scots Chancellor's heart, he went for the expedient deal. Although nothing was finally agreed, there should be a deal on 13 July.
Mr Lamont has made real progress elsewhere. Drafts of the capital adequacy directive, which sets minimum capital requirements for investment firms, had seriously threatened many of London's independent stockbrokers, who would have been at a disadvantage compared with the Continental style of bank-owned firms. But the version that has been agreed, setting the minimum at ecu50,000 for firms that do not hold clients' money, is reasonable.
There was also relief in the City yesterday about the investment services directive, which once looked as if it could kill off London's huge foreign exchange and Eurobond markets. The disclosure requirements had threatened to alert a market-maker's rivals whenever it took a
large position in a stock, but they are now acceptable to the professionals.
Only the insurance directive failed to create enthusiasm, mainly because there is a great difference between passing laws and changing cultures. It will be years before UK insurers crack the Continental market - but, given their recent track record, that may be no bad thing.
- 1 Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
- 2 Prince held a Facebook Q&A and this is the only question he answered...
- 3 'F*ck it, I quit': KTVA reporter Charlo Greene quits live on air in spectacular fashion
- 4 35,000 walrus gather ashore on north-west Alaska beach 'for a rest'
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Snoop Dogg and Jared Leto buy a stake in Reddit as A-list invests $50m
Prince held a Facebook Q&A and this is the only question he answered...
Brad Pitt, on the moment he completely lost his temper with Clint Eastwood's son
Cheryl Cole officially 'the most dangerous celebrity' on the internet
Ebola virus in the US: What are the symptoms, what is it and is there a cure?
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
The Osborne Ultimatum: Chancellor’s benefits freeze bombshell will affect ten million households
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Should gay sex be illegal? 16% of Britons think so
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Benefits 'smart cards' plan revealed by Iain Duncan Smith to stop claimants spending welfare money on alcohol
- < Previous
- Next >
iJobs Money & Business
£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...