Tax ‘opt-out’ set to pave way for MEP pay and perks deal

Date: 21/06/01

By John Shelley

AN INGENIOUS compromise tabled by Stockholm has re-ignited hopes of a deal over long-delayed plans for reform of the controversial pay and perks package for MEPs.

Diplomats say Sweden may have cracked the problem by offering four member states an opt-out on proposals for members to pay a 'community tax'.

When Nicole Fontaine became the assembly's president in 1999, she pledged to finalise a deal on the so-called MEPs' statute but all attempts have so far been thwarted because of a powerful lobby of anti-reform members and disagreement among member states.

The French came close to a deal at the end of their presidency but the negotiations collapsed due to a stand-off over the question of where MEPs should pay tax.

The Parliament was determined all members should pay a community tax into EU coffers but four countries - Sweden, Finland, the UK and Denmark - were ideologically opposed to having elected politicians who did not pay tax in the country they are representing.

Now the Swedish have put forward a compromise, which looks set to clear a key hurdle next week - being accepted by the Parliament's legal affairs committee. "It's a brilliant formula that has been developed," said Dutch socialist MEP Michiel van Hulten. "If the Swedes pull this off it's a major step forward, after that it really becomes just technical discussion. "

Under the Swedish deal the four countries opposed to the community tax will be offered an opt-out.

They will instead pay tax in their own countries and be covered by national social security rather than the European benefits which their colleagues will receive.

The breakthrough has been possible because Germany's MEP Willi Rothley, the parliament's rapporteur on the statute, appears to have thrown his weight behind the plan.

Previously seen as a hard-line opponent of any weakening of the community tax model and a staunch defender of MEPs generous privileges, he has now accepted that without an opt-out for some countries, no deal will ever be struck. "It's the only way out of the impasse. It would be somewhat futile to adopt a statute specifying community taxation without derogation, only to await unanimous approval by the council," he says in his latest report.

Detailed negotiations on the final level of MEPs' pay and controls on expenses will still have to be hammered out.

While these talks will undoubtedly be difficult hopes are high the statute could be finalised some time during the Belgian presidency. "Now that we have a possible solution on community tax I can see the end-game coming," said one diplomat.

An ingenious compromise tabled by Sweden has re-ignited hopes of a deal over long-delayed plans for reform of the controversial pay and perks package for MEPs.