‘Union must look before it leaps on corporate tax’

By Dace Akule

Date: 02/09/04

INGRIDA Udre, the nominee European commissioner in charge of taxes, has said that the EU should first decide what it wants to achieve by harmonizing the corporate tax base, before taking any steps in this direction.

"We have to analyze what the EU wants to achieve by harmonization - whether to improve the overall competition of the EU, to help countries with different development levels develop more cohesively or to achieve bigger investment inflow in one or the other EU country," Udre told European Voice. But later, on Latvian state television, she said that she would defend the right of national governments to decide on direct taxes.

This should disappoint leaders of France and Germany, who are in favour of harmonized corporate taxes, but should please the UK, Ireland and some of the new member states, which oppose it.

Udre said that one of her first tasks in the new Commission, which will take office on 1 November, would be to discuss this sensitive matter with the Union's finance ministers.

Estonia, Latvia, Lithuania, Cyprus, Poland and Slovakia charge up to 19%, while France, Germany and Sweden have corporate tax rates ranging from 35-40%. Worrying that investors will find them less attractive, Paris and Berlin have pressed for an EU-wide minimal corporate tax rate. But, currently, the EU has no power on direct taxation. The new constitution, which will have to be ratified by all member states to enter into force, preserves member states' veto right over direct taxes, which are seen as a core element of a nation's sovereignty

Udre's nomination as commissioner has sparked protests in Latvia, with several non-governmental organizations claiming she lacks the competence for the job. But Latvian Prime Minister Indulis Emsis explained that he chose Udre, who is a former accountant and bookkeeper, to enable Latvia to receive an economic portfolio in the next Commission. Udre was Latvia's economics minister for two months in 1999. Since 2002, she has been the speaker of the Latvian parliament, the Saeima.

Dace Akule is a Latvian freelance journalist

Article discusses statements by Ingrida Udre, nominee European Commissioner for Taxation, on corporate tax harmonisation in the European Union.

European Commission: DG Taxation and Customs Union: Taxation http://ec.europa.eu/comm/taxation_customs/taxation/taxation.htm

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