France renews push for EU tax-rate convergence

13th April 2011, Comments 0 comments

The French government said Wednesday that a new pact for shared EU economic governance should demand tax-rate convergence, a hugely controversial issue for states wanting fiscal independence.

The call by French Secretary of State for European Affairs Laurent Wauquiez threatens to reopen a row pitting Dublin against Paris which has led to sharp exchanges over Ireland's low corporate tax rate.

"We would like within the framework of the euro pact for us to go a long way, much further, towards fiscal convergence -- notably including coordination on tax rates," Wauquiez told AFP.

"We absolutely want (Europe) to battle against un-cooperative tax practices," Wauquiez said.

A new "Euro Plus Pact" backed at a EU summit last month calls on member governments to target annual benchmarks in a bid to strengthen the European economy.

The European Commission has already unveiled plans for companies to be able to opt in to a Europe-wide corporation tax regime.

Ireland has a 12.5 percent corporate tax rate which France especially has criticised as being unfairly low while Dublin argues that in practice, its levy works out to be higher than those of its European peers.

Ireland had to call on the EU and International Monetary Fund for a massive 85-billion-euro bailout last year. A newly elected government in Dublin has since been trying to reduce the 5.8-percent interest rate charged on the loans but Paris has called for its corporate tax rate to be amended in return.

As a result, eurozone leaders have so far refused to give Dublin the same leeway as Greece, which won a one-percentage-point interest rate cut and saw its repayment period extended last month.

© 2011 AFP

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