UK’s Tax Red Line Angers French

by Ulrika Lomas, Tax-News.com, London

21 June 2004

The United Kingdom’s successful fight to retain a national veto on the issue of taxation generated a significant amount of friction in talks on the European Constitution in Brussels last week, particularly with the French leader Jacques Chirac.

British Prime Minister Tony Blair went into the talks after telling the House of Commons last Wednesday that “there is no way we are going to have tax harmonisation or other people deciding on our tax rights.”

It was a position that angered the governments of Germany and France who were dismayed on the lack of progress made in the talks between 25 European heads of state. "The ambitions foreseen [for the constitution] are reduced, especially on tax and social security, by the clear position of one country, essentially the United Kingdom,” commented President Chirac on emerging from the discussions last week.

“I fear we will not be able to progress as far as we should. And so we would hold back a Europe that could avoid being blocked by a single country," the French leader added.

Chirac implied the British stance could count against the former UK government minister Chris Pattern’s chances of being nominated for the European Commission presidency – the EU’s most senior post, as it would be difficult to award the job to a candidate from a country "which does not take part in all Europe's policies".

In fact the selection of Europe's first 'President' was postponed after the Constitution was agreed at the end of the week, with the national tax veto still in place. The equally vexed issue of voting rights was resolved by a formula establishing a majority of 15 Member States representing not less than 60% of the Union's population.

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