Treasury scorns EU direct tax proposal

Treasury opposes EU direct tax idea
Treasury opposes EU direct tax idea

By Alex Stevenson

Britain will oppose European Union proposals to introduce direct taxation from Brussels, a minister has said.

The Treasury was quick to rule out the coalition government's support for the idea, which is being developed by the EU's budget commissioner Janusz Lewandowski.

He told the Financial Times Deutschland newspaper in an interview published earlier this week that a direct tax could be spent on international policies including a financial transaction tax, CO2 emission auctions and an aviation scheme.

"The government is opposed to direct taxes financing the EU budget," commercial secretary James Sassoon said.

"The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes."

Britain's move follows opposition to the idea from Germany's finance ministry, which moved quickly to distance itself from the proposals.

"The demand to introduce an EU tax contravenes the position underlined by the (German) government in its coalition agreement," the Reuters news agency quoted a finance minister spokesman as saying yesterday.

"The government's reservations are about the instrument of an EU tax as such."

Philip Whyte, a senior research fellow at the Centre for European Reform thinktank, told proposals for direct taxation were always unlikely to meet with a positive response.

"This is a proposal which has got very little chance of success," he said.

"There's not much appetite in many EU capitals for the EU to start having a say over what is taxed and at what rate. That has very little chance of developing."


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