Hungary slams France over EU funds proposal

BUDAPEST, Sept 9 (AFP) – Hungarian Finance Minister Tibor Draskovics has strongly rejected a French proposal to axe structural funds for new EU members with tax rates below the EU average, Vilaggazdasag daily reported Thursday.  

Draskovics’ comments came after French Finance Minister Nicolas Sarkozy had said on Sunday that he intended proposing that new members of the European Union with lower than average tax rates be barred from receiving structural aid funds.  

Sarkozy argued that if these countries were rich enough to lower taxes they should not seek such funds from old member states.  

“This is completely unacceptable and I am convinced that it will never be adopted by the EU,” Draskovics said in reference to the Sarkozy proposal. “The corporate tax rules in the EU are the responsibility of national governments.”  

“There is no proof that certain investors who leave France and transfer jobs to new member states are doing so because of lower corporate tax rates there,” he added.   Slovakia and the Czech Republic earlier this week also publicly came out against the French proposal.  

Low corporate tax rates in several of the 10 countries which joined the European Union earlier this year have attracted criticism with German Chancellor Gerhard Schroeder and French President Jacques Chirac vowing in May to work together to harmonise tax rates to prevent what they see as fiscal dumping rates by new member states.  

But tax harmonisation is also opposed by other old EU members, notably Britain and Ireland.