European Union: Tax Harmonisation (Hansard, 2 February 1999)

§ Lord McIntosh of Haringey
My Lords, let me answer by drawing from the joint statement made by the German Chancellor and the Prime Minister in December which states, We strongly support action to combat unfair tax competition … But we will not support measures leading to a higher tax burden and jeopardising competitiveness and jobs in the EU … At no stage have we considered measures to harmonise personal income tax … We fully support the need for enhanced co-operation in the fight against tax abuse and evasion…But where tax policy is used to support wider health and environmental objectives, there may he advantages in co-ordinating action across the EU".

§ Lord Blaker
My Lords, the Minister and the Government set great store by the veto. If an application by the Government to join the single currency is met by the response that we may do so if we agree to a general harmonisation of taxes—which is what Herr Lafontaine wants—or that we should agree to a move towards qualified majority voting on tax matters, what would be the Government's response? Will the Minister give a unqualified assurance that no such deal would be accepted?

§ Lord McIntosh of Haringey
My Lords, that question makes two presumptions, neither of which I can accept. The first one is that there is a move towards general tax harmonisation in the European Union. I have already quoted the boss of Herr Lafontaine to make it clear that that is not the case. The second assumption is that some such condition will be made on an application to join the single currency. I do not accept that proposition either.

Lord Bruce of Donington
My Lords, in view of the constitutional and economic importance of these tax harmonisation considerations, I ask the Government in the most non-controversial fashion whether they will make available to Members of this House a pack consisting of the important documents that have been issued by the Commission and by the Government and which have either been sifted or are due for scrutiny by the various Select Committees? I am quite sure the Government will agree that that would be most helpful to the detailed discussions which sooner or later will have to occur in this House.

§ Lord McIntosh of Haringey
My Lords, the explanatory memoranda which accompany all draft directives are available to all Members of this House.

§ Lord Taverne
My Lords—

§ Lord Higgins
My Lords, part of the so-called harmful tax practices—

§ Lord Carter
My Lords, I suggest that the noble Lord, Lord Taverne, speaks and then the noble Lord, Lord Higgins.

§ Lord Taverne
My Lords, following the constructive suggestion of the noble Lord, Lord Bruce of Donington, will the Government continue a pragmatic approach to the question of tax harmonisation, recognising that certain kinds of harmonisation are obviously desirable—one can hardly argue against state subsidies and not oppose certain special kinds of tax incentives which have the same effect—but, on the other hand, also recognising that certain kinds of harmonisation, which would lead to the loss of business across the Atlantic or elsewhere, would be undesirable? Will the Government continue to be pragmatic in their approach?

§ Lord McIntosh of Haringey
My Lords, my first Answer, which made it clear that we shall continue to be pragmatic, demonstrated that that is the policy not only of the British Government but also of the German Government.

§ Lord Higgins
My Lords, why is the "hit list" of so-called harmful tax practices which is being considered by the European Union Code of Conduct Group not being published when our national interests are at stake and many of our industries may wish to make representations on the subject? More specifically, last Thursday the Minister said that roll-over relief for British ships is on the list. Can he give the House an assurance that other much heavier subsidies and tax reliefs for shipping in other European countries are also on the list?

§ Lord McIntosh of Haringey
My Lords, when the noble Lord uses the phrase "so-called harmful practices", he has decided that certain practices are harmful. We do not accept that the five examples that we have given to the European Union are harmful. There are 80 more such examples practised by other member states. Those are retained in confidence by ECOFIN until the Code of Conduct Group has completed its consideration.

§ Lord Boardman
My Lords, is the noble Lord content that taxes should be imposed on British subjects by a consortium over which we have no control?

§ Lord McIntosh of Haringey
My Lords, that is simply not the case. My first Answer, and every answer I have given on this point over recent weeks and months, have made it clear that we are in control of our own fiscal policies.

§ Lord Ewing of Kirkford
My Lords, in view of the interest in this matter can my noble friend tell your Lordships' House whether, should tax harmonisation be introduced, it would mean that those who receive tax free allowances would need to start paying taxes?

§ Lord McIntosh of Haringey
My Lords, I think my noble friend is using a wide definition of tax harmonisation. It has never been suggested that there should be any harmonisation of personal income tax.