European Taxes Are Too High, Says Bolkestein

by Ulrika Lomas, Tax-News.com, Brussels

17 May 2004

EU Commissioner for the Internal Market and Taxation, Frits Bolkestein joined the debate on European corporate tax last week, suggesting that larger and more established member states may actually benefit by following the tax cutting lead of Eastern Europe.

Bolkesteins’s comments come in the wake of a joint meeting between Germany and France held in Paris last Thursday, at which representatives from the two governments put forward plans for a uniform system for calculating a company's tax base within the EU.

Fearing the prospect of an uneven European tax playing field as the new member states aggressively cut their company tax rates seeking fresh investment, the two largest members of the eurozone also called for the establishment of bands within which corporate tax rates in the Union should be set.

However, speaking at a press conference in Prague, Bolkestein reiterated the Commission’s dismissive stance on corporate tax harmonisation, and suggested that in general, Europe's taxes are “too high.”

"High taxes are a brake on economic growth and also on creation of jobs. I am in favour of a reasonable degree of fiscal competition," he added, observing that Slovakia’s 19% flat rate of tax now contrasts markedly with Germany’s 40% corporate tax rate.

"Perhaps the example of Slovakia or other countries with a low corporate profit tax rate will be instrumental in stimulating the French and German government to also lower their tax rates," he suggested.

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