Eurocommissaris McCreevy ziet niets in verdergaande harmonisatie van belastingregimes tussen EU-lidstaten (en) - Main contents

Irish internal market commissioner Charlie McCreevy has suggested tax harmonisation is not and will not be on the Brussels agenda whether "by the front door or the back", stressing tax competition among countries is "healthy".

In a speech given in Brussels on Thursday (10 November), Mr McCreevy said "National vetoes will be retained and competition between member states for inward investment - some of it tax based - will continue. Tax competition is a healthy spur to governments across Europe," according to the Financial Times.

He also expressed doubts about the initiative announced earlier by tax commissioner Laszlo Kovacs i to create a common corporate tax base within 3-4 years.

"To establish a common tax base we will need first to get agreement on what constitutes taxable profits. Assuming we can agree on [this] during our lifetime, we will probably then have completed one third of the journey. The harder bit comes next," he said.

Several experts argue a single tax base would lead to better efficiency for companies, due to a higher transparency and easier calculations.

However, its opponents say the move would be the first step to harmonising tax rates.

National opposition

Tax policy is viewed as a key element of national competency in EU member states, and some of them strongly oppose any mention of potential tax harmonisation within the bloc.

Ireland in particular has benefited from its lower corporate taxes in attracting foreign investment, with some of the poorer countries in central and eastern Europe viewing this as an example to follow.

The EU executive claims it has no intentions to trigger tax harmonisation, and that the Kovacs single tax base proposal does not portend such a move.

However, Slovak finance minister Ivan Miklos recently suggested he doubts that the "commission can find even three countries that would agree on the actual common provisions of such a base."

The trouble with indirect taxation

The EU does have a set of common rules about value added tax (VAT) on various products.

In this field, the commission on Thursday won a case against Germany, as the Luxembourg-based European court ruled that Berlin must start taxing pre-rolled packs of tobacco.

The popular products, commonly known as "sticks", can be quickly inserted into rolling papers and smoked but cost about half as much as normal cigarettes due to high tobacco tax in the country.

The EU executive is also planning to take Sweden to court due to its high tax on wine, which is hurting wine importers unfairly the commission says.