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EU Convention Remains Split Over Direct EU Taxation

by Ulrika Lomas, Tax-News.com, Brussels

08 April 2003

A meeting of the European Convention took place in Brussels last week which highlighted the division between member states on the issue of a single European tax.

The Convention, which has 105 members, is charged with drawing up a European constitution. According to reports it was split on many issues, but the most profound rift was over the issue of whether the EU should have its 'own resources' - the buzzword for a direct European tax.

The European Commission is reportedly strongly in favour of a direct EU wide tax levied from Brussels as it fears falling revenues in the wake of liberalisation in customs and the agricultural sector. The EU currently gets the bulk of its funds from farming levies, customs duties and direct funding from member states.

Those states known to be particularly opposed to the idea of a direct tax are the UK, Ireland, Denmark, Sweden and Finland. Conversely, German socialist MP Jurgen Meyer and Austrian government representative Hannes Farnleiter strongly favour the tax according to the EU Observer news service. Their argument is that a tax is already in place in all but name through member state contributions and a host of other levies.

A separate working group has been set up to consider the issue. It is chaired by presidium member and MEP, Inigo Mendez de Vigo.

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