Tax wars
New versus old Europe
THE battle lines over corporation tax in the European Union (EU) are moving east. On one side is a pack of countries led by France and Germany which recently launched a joint initiative to harmonise the tax base for corporate taxes in the EU as a prelude to establishing minimum rates. On the other are the eight new EU members from central and eastern Europe that have joined Britain and Ireland in standing up for tax competition. Having cut their business taxes sharply to lure foreign direct investment, the newcomers are scornful of plans to set minimum (meaning higher for them) rates. Poland has turned the dispute into a national crusade, fuelled by fears that Germany and France will make disbursement of EU development aid to new members conditional on them raising their tax rates.
This article appeared in the Business section of the print edition under the headline “Tax wars”
From the July 24th 2004 edition
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