Monetary chief issues tax warning

By Anna McLauchlin

Date: 02/09/04

FRANCE and Germany should block the EU's next spending plan if the new member states do not hike corporate tax rates, Pervenche Beres, the new chairwoman of the European Parliament's economic and monetary affairs committee, has told European Voice.

Beres, a French Socialist, said resources in the rich member states will dry up if low taxes continue in the new countries

"If all the businesses in these countries are leaving to settle in the new member states because there is a more attractive corporate tax, how can these countries go on financing solidarity in Europe?" she said

"My answer is that some countries should not accept the new financial perspectives if they do not have a guarantee on the corporate tax issue."

The European Commission has adopted a proposal to try to harmonize the EU's corporate tax base but it can be vetoed by any member state. It will be debated in the Autumn

Europe's new member states impose greatly reduced corporate tax rates. Poland and Slovakia have this year reduced rates to 19% while Estonia has a zero corporate tax rate. Companies in Germany, meanwhile, have to pay 38.3% tax

But Beres said a raised budget was necessary to make the EU's enlargement work and called a recent request by six of the EU's richest states to cap national contributions to the budget "the most stupid idea they have ever launched". The six states are France, Germany, the UK, Austria, the Netherlands and Sweden

"I've never seen an enlargement that didn't put meals on tables and meals on tables come from extra funds for these countries," she said

Beres also supported a relaxation of the EU rules underpinning the euro laid out in the Stability and Growth Pact

"You can't go on with a rule where the two main economies of the eurozone are in bad shape because of this collective 3% deficit rule," she said

The first meeting of the Parliament's new economic and monetary affairs committee will take place on 21 September

Interview with Pervenche Beres, new chairwoman of the European Parliament's Economic and Monetary Affairs Committee, in which she raises concerns about corporate tax policies in some of the new Member States.

European Parliament: Economic and Monetary Affairs Committee http://europarl.europa.eu/committees/econ_home.htm

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