Sarkozy eases off on uniform EU corporate tax

2nd November 2004, Comments 0 comments

BUDAPEST, Nov 2 (AFP) - French Finance Minister Nicolas Sarkozy on a visit to Budapest on Tuesday eased his rhetoric on corporate tax harmonisation in the European Union saying each member country could have its tax rate so long as competition remained "fair and reasonable."

BUDAPEST, Nov 2 (AFP) - French Finance Minister Nicolas Sarkozy on a visit to Budapest on Tuesday eased his rhetoric on corporate tax harmonisation in the European Union saying each member country could have its tax rate so long as competition remained "fair and reasonable."

"It is completely normal that there be different corporate tax rates in different European countries," Sarkozy told journalists after meeting Hungarian Prime Minister Ferenc Gyurcsany and Finance Minister Tibor Draskovics.

"But with the Hungarian Finance Minister we agreed that competition must be fair and reasonable," he added.

Sarkozy in September caused an uproar in the EU, especially in new member countries like Hungary, with his proposal to cut EU structural funds for the new members that have corporate tax rates below the bloc's average.

Several Western European countries, most notably France and Germany, have voiced concern that low corporate tax rates in the new EU member-states were sparking a transfer of production and jobs to the east.

Draskovics at the time called Sarkozy's proposal "completely unacceptable" and argued that corporate tax rates - which are at 16 percent in Hungary - were not the sole reason to shift production for companies who also look for high productivity.

"There is a great awareness in Hungary of the risk of pursuing an overly aggressive fiscal policy," Sarkozy said after his meetings.

"On my end there is a great awareness that we, the countries of Western Europe, have to make progress on productivity," he said.

Sarkozy, whose father is a Hungarian immigrant, also hailed the country's economic development since its transition from communism in 1989 as well as its accession to the EU on May 1.

"I have not returned to Hungary in 10 years and I can say I am impressed by the spectacular progress of your country," he told journalists.

"Hungary makes Eastern Europe proud. (It) is a success story of European integration."

Sarkozy arrived to Budapest on Monday and was expected in Prague later Tuesday for talks with Czech government leaders before returning to Paris in the evening.

© AFP

Subject: French News

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