Member States Remain Divided On European Constitution

by Ulrika Lomas, Tax-News.com, Brussels

29 October 2003

As European Union foreign ministers meet in Brussels to discuss the European Constitution, member states remain fundamentally split over issues such as taxation, and there appears little indication of a compromise in the foreseeable future

According to the EU Observer, Italian Foreign Minister Franco Frattini said that member states were having “wide ranging” discussions on the delicate issue of qualified majority voting, especially in the area of tax policy. This is highlighted by the opposing views of the British and French governments who seem to be placed at either end of the spectrum on this fundamental issue. Nevertheless, Frattini diplomatically added that despite these diverse standpoints, the current draft of the Constitution offers “quite a good compromise”.

However, the UK is not the only country that is drawing a ‘red line’ on losing the veto on tax decisions with some new member states, notably the Czech Republic, Estonia and Latvia, expressing opposition to the loss of the national veto on tax.

Ireland has also acknowledged that it faces a tough fight to retain its 12.5% rate of corporation tax, the lowest in the Union, and is also objecting to loss of the national veto in the area of criminal justice.

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