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EU Fails To Agree Majority Voting On Tax

Ulrika Lomas, Tax-News.com, Nice

11 December 2000


In the early hours of Monday morning it seemed that the EU was set to retain the national veto on fiscal matters and social security, when a formula for revised weights for the Qualified Majority Voting (QMV) process was finally agreed. At one point during the weekend, disagreements between the larger and smaller member states were so sharp that the Commission's 'double majority' plan was revived in order to break the deadlock (a majority of member states and of population), but a revised French table of voting weights was presented on Sunday night which gained eventual acceptance. Germany had been expected to hold out for more votes than any other country, having the largest population, but in the end gave in, so that Britain, France, Germany and Italy - the biggest EU countries - now each have 29 votes.

The rules of the EU summit are that nothing is agreed until everything is agreed, accounting for all those late nights: the leaders can't go home until the dossiers are tied up in a bundle with pink ribbons. The summit, whose overall aim is to prepare for enlargement, had to set up voting weights for the prospective new entrants as well as changing the current weights to be fairer towards countries with larger populations, and for much of Sunday agreement proved to be elusive.

QMV is however to be extended to a number of new areas, including trade in services, although the French predictably refused to abandon the veto for cultural affairs.

Assuming that the tax veto remains, as now seems highly probable, this is bad news for the 'harmonising' tendency in the EU. The Finnish, who hold the presidency for the next six months, have said that they will vigorously pursue tax harmonisation, but there is little they can achieve if unanimity is required.

The summit can hardly be called a success: although agreement has been reached on a number of issues, including the latest version of 'variable geometry' (allowing small groups of nations to make progress independently of the remainder), the 'enhanced co-operation' procedure as it is now called will be excluded from many contentious areas; and on one of the most important issues, that of commissioners, who are seen as national virility symbols, there was no agreement on rotation - there will be one commissioner per state up to 27, which effectively sidelines the issue for the foreseeable future.

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