Schroeder criticises new EU states

30 March 2004

BERLIN – German Chancellor Gerhard Schroeder on Monday fired a warning shot across the bows of future European Union members which he accused of slashing corporate taxes while seeking billions of euros in aid from Brussels.

“We are going to have address this development critically with the new members,” said Schroeder in a speech made at a foundation linked to his Social Democratic Party (SPD) in Berlin.

Schroeder said the 10 states due to join the EU on 1 May had cut corporate taxes on average to less than 20 percent. In contrast, most of the 15 present E.U. members had corporate taxes of over 30 percent.

These two blocs will create competition in the EU not seen since its founding in 1957, said Schroeder, adding this could pose problems.

Schroeder underlined that new members had a right to seek EU structural funds which are used for major infrastructure projects.

But he said there were concerns given the big tax cuts meant the new members were creating a revenue base which could not fund their own infrastructure and were instead turning to Brussels for aid.

The Chancellor insisted that he would take moves to protect the European social welfare state.

Lower taxes and more flexible labour laws are a reason many German companies are laying off workers at home and opening new plants abroad.

The 10 future EU members are: Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Malta and Cyprus.

DPA

Subject: German news