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Germany calls for tax policy

French and German finance ministers yesterday called for an EU-wide minimum tax on financial investments, a move fiercely opposed by the UK government.

Jean Arthuis, the French finance minister, said the EU should agree a code of good conduct to eliminate the risk of unfair competition between member states for tax revenues. Mr Arthuis said: "We are determined to put active pressure on the European Commission to have this code of good conduct in place rapidly. We cannot tolerate these forms of unfair competition."

A new EU taxation policy group, charged with exploring possibilities for co-ordination of tax policy, met on Tuesday. A spokesman for Commissioner Mario Monti, chairman of the group, said: "We hope to achieve a political consensus over tax co-ordination in a series of areas."

The French, German and Belgian governments are concerned about the differences between taxes on capital in EU countries. Germany fears that savers are slipping across the border to set up savings accounts in Luxembourg which, like the UK, has no withholding tax on interest from savings.

A spokesman for the UK Treasury said: "We are strongly opposed to a minimum withholding tax. If Germany has a problem with tax competition from Luxembourg that is for them to sort out themselves."