Treasury euro-tax plans leak out over Internet

LABOUR WAS forced on to the defensive in the European elections campaign yesterday after the Treasury was accused of preparing to harmonise nearly 200 different taxes across the EU. The Tories seized on reports that a European finance ministers' committee, chaired by Dawn Primarolo, the Paymaster-General, was considering dozens of new examples of unfair tax competition.

Ministers also had to face allegations that Labour's leader in the European Parliament had failed to declare he had been given a Jaguar car at a pounds 30,000 discount. Alan Donnelly, a close ally of Tony Blair and leader of the Labour MEPs, denied acting improperly in leasing the car for four years at a special rate.

But the existence of the special finance ministers group, revealed on the Internet, provoked most criticism from the Conservatives. A Dutch government website said European finance ministers will meet tomorrow to discuss the progress of the Code of Conduct Group on "Harmful Tax Competition".

The group, set up in 1997, is charged with assessing different areas where taxes could be harmonised to end unfair competition between member states.

The website shows that 100 new taxes have been added to the 80 already uncovered, including tax breaks for shipbuilding and enterprise zones. Britain was told it is offering unfair support to its film industry.

Francis Maude, the shadow Chancellor, said it was "outrageous" that the only way of finding out about the group'sactivities was through the Internet. "We're used to Labour raising our taxes by stealth, but the European elections have made them even more duplicitous," he said. "If Gordon Brown is going to change the British tax system to suit Europe he should stand up before the British people and say so."

Margaret Beckett, Labour's campaign co-ordinator, denied that there was a plan to harmonise taxes such as VAT. "We are not talking about tax harmonisation, same tax rates and so on," she told the BBC's On the Record programme. "What they are talking about is the fact that yes, there are some unfair tax breaks, and it's harming British companies, so it's in our interest to see if we can get agreement."

Mr Donnelly, who leads the European Parliamentary Labour Party, said: "I have never hidden the fact that I lease a car from Jaguar. I will be speaking with the secretary-general of the European Parliament. I will explain the full facts and ask whether this matter should be declared in my Register of Interests."

Labour will fight back against the Tories in its party election broadcast tomorrow, accusing William Hague of trying to wreck the European Social Chapter. They will accuse the Tories of wanting to deny fathers new rights to paternity leave and equal rights at work for part-time workers.