§ 11. Mr. John Cryer (Hornchurch)When he last met his counterparts in the European Union to discuss tax harmonisation. [50497]
§ The Chief Secretary to the Treasury (Mr. Alistair Darling)The Government's view is that direct taxation is primarily a matter for national Governments. Decisions on European tax issues are subject to unanimity.
§ Mr. CryerAs we know, there have been extensive discussions within the auspices of the Economic and Finance Council on future tax harmonisation. Can my right hon. Friend guarantee that there will be no future discussions on income tax harmonisation within the European Union because, as sure as eggs is eggs, that is what enthusiasts for EMU will press for next?
§ Mr. DarlingIt is not true to say that there have been extensive discussions. ECOFIN has discussed measures to cut down on tax evasion and also the effects of harmful tax competition—a matter that has been pursued by this Government—as some countries are offering tax incentives in particular areas rather than a generalised reduced rate of corporation tax. I listened carefully to what my hon. Friend said in the debate on the European Union the other night and I understand his general position on it—let alone the European currency. I believe that his fears are exaggerated and I do not share the basis on which he opposes the concept of monetary union or the European Union itself.
§ Mr. John Whittingdale (Maldon and East Chelmsford)With the London art market already largely destroyed in the pointless quest for tax harmonisation, does the Chief Secretary accept that the Commission's proposal to impose a 20 per cent. withholding tax on interest income poses a real threat to London's position as an international financial centre and will lead to investors simply switching their money to Zurich or New York? Will he give a categorical assurance that the Government will veto that proposal and reject any compromise that damages the City of London?
§ Mr. DarlingI was wondering what the hon. Gentleman was doing on the Front Bench, but I am reminded that he is now an Opposition Treasury spokesman and I welcome him to that job. I recently met an individual who is involved in the art world and am aware of the fears. Frankly, we were sticking up for the position of the art market long before the hon. Gentleman showed any interest in the matter. The Government are aware of the problem—and to say that the London art market is under threat is to raise unjustified fears, as it is competitive and well regarded throughout the world.