Paymaster General Reiterates UK Stance Against EU Tax Harmonisation

by Robert Lee, Tax-News.com, London

07 November 2001

Paymaster General, Dawn Primarolo, last week confirmed Britain's opposition to all forms of tax harmonisation across Europe.

In response to Conservative MP John Bercow who asked Ms Primarolo what discussions the Chancellor of the Exchequer, Gordon Brown, has held with the Secretary of State for Trade and Industry regarding the European Commission's proposals for a single consolidated company tax base, she replied: 'The Government's position is that tax harmonisation, including proposals for a consolidated company tax base, is not the way forward for Europe ... The government will not support any action at European level that will threaten jobs or the competitive position of British business.'

When asked what assessment Gordon Brown has made of the need for 'further EU-level reforms of company taxation to achieve the economic goals established at the Lisbon European Council of March 2000', the Paymaster General said: 'Company tax issues need to be considered in the context of the economic goals established at the Lisbon European Council and the business agenda agreed at the Stockholm European Council, which means reducing unfair state aids, acting against unfair tax competition, promoting R&D and innovation, a better, simpler regulatory environment and boosting skills.'

According to reports from Reuters, European tax commissioner, Fritz Bolkestein, has said that the EU was not seeking harmonisation but was of the opinion that the 'common calculation of tax bases tend to lead to convergence of rates over time.'

But German Finance Minister Hans Eichel says he fully supports the idea of a common basis for company taxation. 'We can't continue to have 15 different tax systems. We need one system,' he told reporters. Although he added that he did not expect Europe to have common corporate tax rates in the near future.

According to a Commission spokesman, the EU plans to hold a public hearing on the issue some time next year.

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