Giscard Threatens Tax Harmonisation In New EU Constitution

by Ulrika Lomas, Tax-News.com, Brussels

11 November 2002

Ex-French President Valéry Giscard d'Estaing, Chairman of the covnvention which is preparing a new constitution for the European Union, has said that he expects tax harmonisation to be one of the key features of the Constitution, meaning abandonment of the national veto over fiscal change which is held so dear by the UK.

Speaking to the Kangaroo group, an informal body of key industrialists that has always been strongly pro-integration in Europe, Giscard said that a majority of his convention was in favour of harmonisation, allowing the EU to set minimum levels of corporate tax and ensure that value added tax did not diverge greatly from one country to the next. However, it would not affect taxes on personal income, wealth or property.

"There's a strong current in the convention in favour of making certain fiscal questions settled by qualified majority voting," Mr Giscard d'Estaing said. "There's acceptance of a certain harmonisation. I believe that we will propose a solution to move to a system for taxes that are definitely connected with the market."

Giscard also said that states which did not ratify the new Constitution would be excluded from political aspects of the new Europe: "The probability is that of 25 or 27 member states, 23 would accept the constitution and two or three will refuse," he said. "We have to abrogate the EU treaties that exist. If a country says that it does not like the new treaty, there's no existing structure for them to cling to, they cannot seek refuge in the old agreement.

Obviously thinking of the UK, whose exclusion from the EU would bring joy to every French heart, Mr Giscard d'Estaing said that countries which were excluded would play a similar role to members of the European Free Trade Association.

The convention will report next year, and the new EU treaty which results is expected to be adopted in late 2003 or early 2004.

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