Those EU myths - and occasional truths

More tax on savings

THE CHARGES

There is a plan to withhold 20 per cent tax on interest earned by European citizens who invest their savings in other EU countries. This would also affect financial services. 11,000 city jobs may be at stake.

WHERE DID THE STORY SURFACE?

In The Times on

9 November, but really a hardy perennial in the EU for at least 15 years. Gordon Brown

confidently told BBC these are `completely untrue' scare stories

IS IT

TRUE?

Yes, but Britain may veto it. Estimated

losses for the City are put at pounds 5bn a year. In the wake of the

onslaught from the Eurosceptic press, Britain's somewhat ambivalent position has hardened considerably.

Film industry tax breaks end

THE CHARGES

At present a package of measures aims to lure foreign investors and film- makers to the UK. This `luvvies' charter' may now be sacrificed on the ideological altar of reducing `harmful' tax competition

WHERE DID THE STORY SURFACE?

The Times yesterday announced a `bonfire of tax incentives'. The Chancellor was said to be ready to join in an attack on 85 schemes, including British help for filmmakers

IS IT

TRUE?

The Government has signed up to a voluntary code clamping down on `sweetheart deals' and tax breaks designed to attract inward investment. In fact, a British minister, Dawn Primarolo, chairs the EU working group on the issue.

Company tax set in Brussels

THE CHARGES

Corporate tax rates will be set by the EU: There is a suggestion that a `floor' should be constructed to stop countries undercutting each other with preferential deals that attract foreign investors

WHERE DID THE STORY SURFACE?

German Finance Minister Oskar Lafontaine's push against all sorts of `unfair competition' among EU partners was widely reported last week

IS IT

TRUE?

Not yet... there is no formal proposal to align corporate taxes but the idea is gaining support on the continent where the average business tax rate is around 40 per cent. This is definitely one to watch in the long term

VAT exemption removed

THE CHARGES

The suggestion is that the current zero-rating for items such as children's clothes, books and newspapers will be scrapped in an attempt to harmonise VAT on all goods across every member state of the EU

WHERE DID THE STORY SURFACE?

`Euro taxman targets VAT' announced the Daily Mail front page on 26 November. Mario Monti, EU tax commissioner was credited with raising this particular spectre

IS IT

TRUE?

Not quite... there is already a minimum standard rate for VAT across Europe on most goods. There are no immediate proposals to harmonise VAT further but the European Commission is committed to closer alignment eventually

Uniform income tax

THE CHARGES

It is being suggested that even personal income tax levels will be set by the Brussels bureaucrats as part of their aim of generating economic uniformity across the whole of what they regard as their empire

WHERE DID THE STORY SURFACE?

Most famously on 25 November as part of the Sun portrayal of Lafontaine as possibly `the most dangerous man in Europe' or `der gefahrlichsten Mann Europas'

IS IT

TRUE?

No. The European Commission has ruled the measure out. However, one European Commissioner did go drastically off

message last week by suggesting that, in the future, income of all Europeans should be taxed at the same rate

The swing to the Right

THE CHARGES

The Prime Minister is reported to have pulled back from his friendship with French and German Socialists just as the Left achieves ascendancy in the EU. The reasons for this change of heart are not clear

WHERE DID THE STORY SURFACE?

`Blair ditches alliance of Left leaders' was the hopeful splash headline in the Daily Telegraph yesterday. The PM was said to be jilting France and Germany for Spain

IS IT

TRUE?

No-one knows, including the government and the spin doctors have not yet pronounced. The story is based on a purported accord between Tony Blair and one of only two conservative premiers in Europe, Jose Maria Aznar, of Spain

Duty free shopping saved

THE CHARGES

Due to be abolished in June 1999, Germany is now more favourable to a five-year reprieve on duty free shopping. The British government is now backing moves which would protect jobs, particularly on ferries

WHERE DID THE STORY SURFACE?

In The Independent yesterday. German concern over job

losses was reported to be dovetailing with the British and French concern for a reprieve of the travellers' perk

IS IT

TRUE?

Yes. Seizing on anything that might strike a chord with Sun

readers the Government has U-turned and backed a five-year reprieve. This is seen

as a low-risk diversionary tactic which will probably get nowhere at all

Babies to cost pounds 1,000

THE CHARGES

There will be a euro-tax on babies. Details about the new scheme are unclear, but in a visitation reminiscent of the horrors visited on the Jews by Herod, firstborns of all European families could be targeted

WHERE DID THE STORY SURFACE?

`Are German EU

bosses going to charge our families pounds 1,000 a child?' The Daily Mirror asked yesterday, in a front-page riposte to the Sun's Lafontaine scare

IS IT

TRUE?

No. The Mirror front page was in fact a spoof, but it did highlight the frenzy that is undoubtedly sweeping through the Mirror's rivals and the difficulty the Government still faces in putting island Britain at the heart of Europe