German Finance Minister Backs Euro-Tax

by Ulrika Lomas, Tax-News.com, Brussels

31 December 2001

Celebrating the end of 2001, a good year for the European 'Ever Closer Union', German Finance Minister Hans Eichel, yesterday took a swipe at Britain by saying he could imagine that tax-raising powers could be transferred to Brussels.

"In the longer term I can imagine a Europe tax," he told the German magazine, Der Spiegel. "It strengthens spending discipline in Brussels if responsibility for expenditure and income is put together."

The idea of a eurotax was mooted by Belgium, serial federalisers and current holders of the rotating EU presidency, in July, but the UK has repeatedly rejected it. A Treasury spokesman stressed yesterday to the Financial Times that reforming markets and increasing competition - not tax harmonisation - should be the priorities for economic reform in Europe. "We don't believe in the harmonisation of taxes - we don't think it would achieve the aim it is intended to," he insisted.

In his comments, Mr Eichel piled on the agony for the UK by adding that the advent of a eurotax would inevitably mean a substantial transfer of tax-raising powers and mechanisms to Brussels: "If there were a Europe tax national taxes would have to be lowered commensurately," he said. "We cannot pile up administrative layer on top of administrative layer and tax upon tax."

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