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Britain may lose EU tax veto under Prodi plan

ROMANO PRODI, the European Commission president, yesterday outlined ambitious EU reform plans including a scaling down of the national veto in areas such as tax policy.

In a determined attempt to set the agenda for negotiations aimed at preparing the bloc for a speedy expansion to admit the former Communist dicatorships of eastern Europe, Mr Prodi said that there could be an "irreversible loss of momentum" for enlargement if the 15-nation EU agreed only on the minimum set of reforms.

His paper included a call for more majority voting, including in "matters of tax necessary for the successful functioning of the internal market", and for a thorough re-structuring of the EU's institutions.

However, in a carefully judged and pragmatic intervention, Mr Prodi soft- pedalled on some of the most controversial ideas proposed by a committee of "Wise Men", including a plan to re-organise the EU's treaties.

Ten years after the fall of the Berlin Wall, Mr Prodi stressed the importance of early enlargement to the east, arguing that next year presents "the last chance to put our houses in order".

In a sideswipe at governments which want to adopt a minimalist agenda for next year's discussion, Mr Prodi attacked the idea that it is necessary only to prepare for a few new entrants in the short term.

"I see nothing but risks and dangers in toying with the illusion that major reform can wait until a later conference," he argued, adding that the danger would be that this would mean: "The whole process will thus be delayed - risking an irreversible loss of momentum."

Mr Prodi believes that enlargement will be speedier than imagined by some member states that want to prepare only for the admission of three or four new countries in the short-term.

Several diplomats argued yesterday that the Commission, which will propose more measures in January, has succeeded in widening the agenda for next year's treaty revision.

However the Commission president had clearly taken note of the criticism from a large number of countries of the report from the "Wise Men", commissioned by Mr Prodi.

Although yesterday's declaration argued "qualified majority voting in the council should become the rule", it added a new qualification that there should be "exceptions for a few fundamental or highly sensitive issues".

The ambitious plan to revamp the treaty by dividing it into two was described, non-committally, as a proposal "worth looking at in detail". Under the proposal the texts would be divided into "fundamental" elements amendable only by a full treaty change, and other areas which could be altered by majority vote.

Although Eurosceptics see this as a ratcheting forward of integration, it would also separate off areas for national competence.

Other reforms on which states are mainly agreed include an end to the right of each nation to one or two EU commissioners, and a "re-weighing" of votes in decision-making ministerial councils to reflect the size of member states.

At its next summit in Helsinki in December, the EU is expected to double to 12 the number of countries holding talks on joining. The first wave of new entries is widely expected within the next five years and membership could reach 27.