Blair stands firm on European tax veto

Tony Blair is under growing pressure to water down the British veto over European Union decisions on tax policy at a crucial summit of European leaders in Nice next month.

Tony Blair is under growing pressure to water down the British veto over European Union decisions on tax policy at a crucial summit of European leaders in Nice next month.

The Prime Minister will insist any decisions on the issue should continue to require the support of all 15 member states. Britain wants France, which is drafting a new governing treaty because it holds the EU's presidency, to drop plans for majority voting on the issue.

Spain, Ireland, Denmark and Sweden are backing Mr Blair's stand but there are fears in London that some of these countries will desert him if France pushes the issue hard.

Under the present draft, majority voting would be allowed only on moves to prevent tax evasion and fraud rather than to harmonise rates of income and indirect taxes.

British government sources insisted the tax proposal was potentially damaging to Britain's interests. Majority voting would have prevented the Chancellor, Gordon Brown, heading off plans for an EU-wide savings tax, an issue on which Britain was isolated but ultimately won a victory.

But Mr Blair will give ground by allowing groups of at least eight EU countries to forge ahead with closer co-operation even when members oppose - despite fears this will create a "two-speed Europe". Thiswould allow Britain to be in the "fast lane" on issues such as justice and home affairs.