EU Constitution Likely To Preserve National Tax Vetoes

by Ulrika Lomas, Tax-News.com, Brussels

11 July 2003

After a year and a half of work, the grand EU Constitutional Convention wound up its deliberations yesterday with a final outpouring of wordy fanfares, and one more plea from President of the Convention, Valéry Giscard d'Estaing for harmonisation of taxation - something which was absent from the draft constitution presented to the Member States recently.

The ex-French President believes that the decision to maintain national vetoes in the area of taxation represents a failure on the part of the Convention, but he was persuaded by fierce lobbying from the UK and Ireland that they would never agree to a draft which ate away at the precious vetoes. Giscard agrees that personal and property taxation should remain a matter for national governments, but thinks that corporate taxation should be subject to majority voting.

The final draft treaty will be presented in Rome next week, hardly different from the initial draft, although a number of technical improvements have been made, and Germany has won a concession allowing member states to continue to set national quotas for immigration.

The draft treaty will be finalised at an intergovernmental conference due to be opened by Silvio Berlusconi in October, at which further pressure will be brought to bear on the UK to allow some watering down of the tax veto.

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