Read Reynders’ lips: More new taxes

Date: 28/06/01

By Peter Chapman

'READ my lips, no new taxes,' said George W. Bush's dad in an infamously cynical political ploy to win the White House. He was made to eat those words a few years later and became a one-term president.

Belgian Finance Minister 'honest Didier' Reynders is not one to fall into that trap. It almost seemed as if he had a tax for every day of his country's six-month presidency of the EU when he introduced his road-map for Ecofin and the euro-12 at a Brussels press conference last week.

Fortunately for Reynders, he is not currently standing for office - and to be fair, he is not looking for a massive increase in the overall level of revenue raised by tax authorities. He is simply discussing new ways of doing it.

Still, there was no mistaking his enthusiasm for that sure-fire vote winner, the European Tax. Details of the plan are still sketchy, but he is looking to flesh it out in more detail with the help of his fellow finance ministers in time for the winter summit at Laeken. You can't have a debate on tax and "duck" this issue, he said.

Why Reynders and his audience no doubt realise that they will all one day have 'EU tax' docked from their pay, perhaps even closer to Belgium's heart at present is progress on the stalled energy tax.

This is seen as a key part of the EU's revenue ambitions, if only the Spaniards and British can be brought into line. By the end of the year Reynders wants progress not only on the form the tax should take, but also its rate.

And if all member states can't be brought in line, Reynders said there should be scope for others to go it alone. "For Belgium it is important to have an agreement with 15 member states. If this is not possible we are open to [having an agreement] with less."

Progress on the energy tax - to ensure Europe meets its Kyoto promises - is not enough for Reynders. Belgium has made no secret losing patience with neighbours, notably France, who continue to drag their feet over liberalisation of the energy sector.

He says talks on the energy tax must go hand-in-hand with further discussions on opening energy markets. "I am convinced we can never have a discussion with all member states unless we have a broad debate about the whole of energy policy."

Then there was the need for a good chat with ministers about the European Commission's recent tax paper, in which Frits Bolkestein called for less talk about harmonisation, at least when it comes to direct taxes, and more efforts to remove distortions in existing indirect ones.

Excise duties on tobacco and alcohol will also be looked at during the next six months, Reynders confirms.

And just to prove that taxes don't always go up, he is promising to examine areas where reduced VAT rates could be applied to realise policy goals such as 'sustainable development', the current buzz-phrase after this month's Göteborg summit.

For the Ecofin nerds, Reynders promised greater focus on 'structural indicators' in the annual broad economic policy guidelines, whilst 'fiscal consolidation' would continue.

That means reform of labour markets, pensions, health care, and yes, sustainable development must be given more importance, and that governments will be told not to prime the EU economy with pre-election tax cuts.

Finally, shepherding through new legislation on financial services will also be a priority, as will be sorting out the respective roles of the Council and European Parliament vis-à-vis the two committees that will be set up to fine-tune and oversee implementation of these rules.

With the launch of the euro also to look after, G7, IMF and World Bank meetings to attend and chairing the euro-12 group, it is going to be a busy few months for Didier Reynders.

Article forms part of a survey on the Belgian EU Presidency, July-December 2001.