Brown Makes Flying Visit To Ecofin Meeting

by Ulrika Lomas, Tax-news.com, Brussels

07 June 2001

It's been a busy week for Chancellor Gordon Brown. On Tuesday, just two days before the UK general election, he paid a flying visit to the monthly meeting of economic and finance ministers, ECOFIN, before jetting back to the UK to join Tony Blair on the campaign trail. (Unlike Central Bank president Wim Duisenberg, who obviously had a more pressing engagement, and caused a few raised eyebrows by sending the bank's vice president, Christian Noyer, in his place!)

The meeting was intended to tackle several thorny issues, including the harmonisation of taxation on energy consumption and the sale of digital products. However, it was the issue of taxation of non-resident savings interest which was the hot topic. The UK has, for some time now, been engaged in a tussle with the European Commission over the implementation of a recent EU compromise on the issue of a withholding tax on non-resident savings. Britain, keen to protect its three trillion dollar euro-bond market, successfully vetoed the proposal for a direct withholding tax last year, but its replacement, a proposed data exchange programme which would ensure that the tax authorities in a person's country of residence were aware of their interest income abroad, has proved no less problematic.

The European Commission wants the right to speak to the governments of countries such as Switzerland, the United States, Liechtenstein, Monaco, Andorra and San Marino directly, and on behalf of the EU, but Mr Brown had thus far opposed this, saying that it would be: 'unacceptable for the Commission to have a mandate on taxation', and possibly fearing that there would be attempts to backslide on last year's decision should the EC be given the task. However, in Tuesday's meeting it was decided that the Commission would carry out the concrete negotiations on the basis of a mandate from ministers to be settled in October. Those present at the meeting also agreed that a high level group of national and Commission officials be established to speed up preparations for this and other aspects of the EU's overall tax package, which includes a code of conduct against unfair business incentives.

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