Belgium stirs up tax levy debate

By CNN's European political editor Robin Oakley

BRUSSELS, Belgium -- Belgium, due to take over the European Union presidency in July, has stirred controversy already by proposing that the EU should have powers to levy taxes within member states to help pay its bills.

The move has been proposed by Didier Reynders, Belgian Finance Minister, who said that Belgium hopes to put the plan to an EU heads meeting in December.

At present the EU is financed by contributions from EU national governments, which are free to raise the money as they choose.

The Belgian move will be greeted with dismay by countries like Britain, Sweden and Denmark which have resisted any moves towards EU harmonisation of taxes. They insist taxation matters must remain under national control.

AUDIO CNN's Robin Oakley: Many feel a harmonised tax system is logical 774 K/71 sec. AIFF or WAV sound

At the Nice EU Summit last December, Britain and others fought off a plan for the national veto to be ended on tax.

Since the veto has been retained too for EU treaty changes it seems unlikely that the Belgian plan would be accepted in the foreseeable future.

The Belgians have long been known as keen integrationists and they see the move as a natural step in preparing the EU for enlargement.

Significantly their announcement came in the same week as the proposal by German Chancellor Gerhard Schroeder for other integrationist measures, including a beefed up European Parliament, an elected commission and tax harmonisation.

It is the latest round in the ongoing struggle over Europe's future between the integrationists and those who favour maximum freedom for nation states.

The Belgians are among those who favour increased powers for the 12-strong Euroland finance ministers group.

Britain, Sweden and Denmark, who have not joined the Euro, insist on major economic decisions being made by the 15-strong Ecofin which includes the finance ministers of all 15 member states.

The Belgians will have angered Britain's Prime Minister Tony Blair, who is about to call a General Election in which his Conservative opponent William Hague will insist that too much has been given away already to an increasingly federal Europe.

Blair had appealed to the Belgian Prime Minister Guy Verhofstadt not to talk up the issue of tax harmonisation ahead of his election.

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December 11, 2000

Enlargement of the European Union
The European Commission
British government
Belgian government

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