MEPs trim their travel perks

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The Independent Online
EURO-MPs voted to cut their lavish travel expenses yesterday and adopt a common salary under a new package designed to clean up the parliament's free-loading image.

The deal would give British MEPs a small pay rise, taking their earnings above those of MPs at Westminster, and would also give them a big tax break worth thousands of pounds.

If agreed by heads of government, the package will be phased in over five years.

The vote was welcomed by Alan Donnelly, leader of the 60 Labour MEPs, who said it was important to tackle the issue of parliamentarians' expenses because public confidence was "seeping away" from the institution.

The package included giving MEPs the right to be taxed at the same preferential rate as EU officials - 22.3 per cent.

The issue will be discussed by EU heads of government at a summit in Vienna next weekend, although it was unclear whether Tony Blair will back the package, in view of the new tax concession. The deal needs the approval of all 15 leaders, making the prospect of it proceeding far from certain.

The agreement bases travel allowances on costs incurred, with MEPs required to submit receipts. That would make impossible most of the abuses of the present travel allowance scheme under which MEPs can make tens of thousands of pounds a year. The European Parliament's travel bill every year for 625 MEPs from 15 countries costs pounds 18m.

Now, MEPs' salaries are paid out of national budgets and are set at the level of parliamentarians in each member state. British MPs are paid pounds 45,066, the same as Westminster parliamentarians, and the common salary is likely to be worth pounds 1,000 to 2,000 more, depending on the exchange rate. MEPs will still enjoy an allowance of pounds 2,200 a month for office management.

t Bankers in Switzerland are trying to cash in on German fears of a change in tax policy after the recent election victory of the Social Democrats.Banks say there has been an increase in the number of Germans flying in with their money as they fear a new wealth tax. The banks are increasing their advertising in Germany.