British tax veto is damaging Europe, says angry Schroder

THE GERMAN Chancellor, Gerhard Schroder, condemned British "intransigence" yesterday in a long-simmering dispute over taxes in Europe.

Mr Schroder used a keynote Bundestag speech to say Britain was damaging European interests, and Germany was better off seeking closer alliance with the French.

The German leader was angered at Britain's failure to support plans for a Europe-wide 20 per cent tax on savings held in another EU country. Germans pay some of the highest taxes in the world, and many shelter their savings in tax savens such as Luxembourg.

"I have little understanding for such blockade tactics that place national interest above European solidarity," Mr Schroder said. "This policy is damaging to Europe and, over the longer term, British interests. We will exert pressure to find an EU-wide solution. Then, if necessary, we should find a national solution."

Tony Blair was unmoved. "Britain is committed to tackling cross-border tax evasion in the EU," said his spokesman. "But the proposals would not solve the problem. Investors would move their business outside the EU. It would also have the unintended effect of damaging a major European financial market, costing Europe thousands of jobs."

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