HC Deb 04 March 1999 vol 326 cc1207-8
9. Mr. Owen Paterson (North Shropshire)

If he will make a statement on the impact on the United Kingdom economy of proposed European tax harmonisation measures. [72421]

The Paymaster General (Dawn Primarolo)

The Government will continue to judge every tax proposal according to the United Kingdom national interest. We will not support any action at a European level that will threaten the competitive position of British business or harm investment and jobs in Britain.

Mr. Paterson

Does the Minister fully understand that, thanks to the fact that the total tax burden in the United Kingdom is 20 to 25 per cent. lower than that in the euro zone, in the past six years the United Kingdom has created 2.5 million more jobs than the whole of the euro zone countries put together? Therefore—as she has just said that it is a matter of vital national interest—will she promise to the House and to the United Kingdom that the Government will use the national veto to prevent any tax harmonisation upwards, as was recently demanded by Mr. Günter Verheugen, the German Minister for Europe?

Dawn Primarolo

That was a very interesting intervention. I thank the hon. Gentleman for confirming that we are a low-tax Government.

Ms Sally Keeble (Northampton, North)

Does my hon. Friend agree that some of the pressures from the Germans for tax harmonisation are based on pressures from their own financial institutions, and that there is concern about those pressures in our own financial sector? Does she agree also that the strong constructive role played by our Government is the best way of countering those pressures, and that use of the types of tactic employed by Conservative Members—with all their prevarications, splits, U-turns and muddles—would leave our financial institutions and economy very much exposed?

Dawn Primarolo

I am happy to confirm to my hon. Friend, and other hon. Members, that the Government believe that tax harmonisation is not the way forward for Europe. Our European partners agree with us that Europe's priority is the promotion of employment reform sand competitive markets, to achieve higher levels of employment and prosperity. That is the Government's policy, and we shall continue to pursue it.

Mr. John Whittingdale (Maldon and East Chelmsford)

The hon. Lady has stated on a number occasions that the Government are opposed to the proposed European withholding tax and to further European tax harmonisation. Will she therefore take this opportunity to condemn Mrs. Pauline Green, leader of the European socialist group, and other British Labour Members of the European Parliament who voted for the 20 per cent. withholding tax and for further extension of tax harmonisation to cover capital gains tax?

Dawn Primarolo

The Government's position on the draft directive on taxation of savings, which is under discussion, is very clear. As the hon. Gentleman knows, we have made it very clear that we shall not agree to anything that damages competitive markets. Moreover, he is in no position to say anything about disagreements within parties on any subject, particularly Europe.

Mr. Dale Campbell-Savours (Workington)

Is not the issue of European tax harmonisation one that could be raised in the new House of Commons euro committee, which the Tories are boycotting? Will my hon. Friend tell me who will represent Conservative opinion in my constituency in favour of the euro? Tories in my constituency who are in favour of the euro would like their voice to be heard in the Westminster committee. Perhaps my hon. Friend will comment on that.

Dawn Primarolo

I am sure that Conservative voters in my hon. Friend's constituency will make up their own minds, as they did at the previous general election, and decide that their interests are best served by voting Labour—which is there, defending their interests.