New EU Member States Urged To Increase Taxes

by Ulrika Lomas, for LawAndTax-News.com, Brussels

03 January 2006

In a recent interview, Germany's Finance Minister, Peer Steinbruck urged the 10 new EU member states to increase their tax rates in order to ensure fairer tax competition across the European Union.

Speaking to Die Welt last week, Mr Steinbruck observed that the lower taxes in the predominantly Eastern European countries may "place a burden on German jobs".

"It cannot be, that some countries demand more funds from the EU budget while on the other hand failing to improve their own tax basis," he added.

After the usual midnight haggling, EU leaders agreed the next seven-year EU budget on December 17, with both the UK and Germany giving up money which will go towards development support in the 10 new member states, including Cyprus and Malta.

The UK finally agreed to surrender EUR10.5bn of its budget rebate over the seven years, up from an original EUR8bn, in return from a concession by France that the Common Agricultural Policy will be part of a spending review in 2008-2009. Previously France had insisted that the CAP was untouchable until 2013.

Prime Minister Kazimierz Marcinkiewicz of Poland, which will receive EUR4bn in regional aid, stated at the time that it was a "budget of solidarity... good for the sake of Poland and for the sake of the development of Europe".

His acceptance of the deal came after a last-minute donation of EUR100m from Germany's Angela Merkel.

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