TAX PROPOSAL:FRANCE SAYS it is dropping plans to push forward with tax harmonisation under its European Union presidency, following Ireland's rejection of the Lisbon Treaty.
Christine Lagarde, French finance minister, told the Financial Timesthat while the proposal for a common consolidated corporate tax base had not been abandoned altogether, Paris would no longer press other governments to back it over the next six months.
"It is on the agenda, but we are not pushing it," said Ms Lagarde in an interview. "It is alive, but not kicking very much."
The relegation of the tax base proposal - a long-standing French objective - is the first sign the Irish No vote is having a knock-on effect on the EU's policy agenda, particularly on those issues deemed to encroach on national sovereignty.
"The landscape has slightly modified because of good old Ireland," Ms Lagarde said, while insisting that "the imperatives are the same".
Until now, Paris had insisted its presidency programme was unchanged.
Ms Lagarde was drawn into the Irish referendum campaign in April when she said France would put tax base harmonisation on its agenda for later this year when the European Commission was expected to unveil concrete proposals.
Ireland has been a strong opponent of plans to harmonise the way corporate tax is calculated, fearing, like Britain, that it would be a precursor to harmonised rates.
Ms Lagarde said France still wanted agreement on other tax questions, particularly agreement to cut rates of VAT on labour-intensive services, including restaurants and hotels, and on energy-efficient products.
In spite of scepticism in other member states, France will next month table firm proposals for a mechanism to reduce VAT on fuel when oil price rises change consumer behaviour and risk triggering "social unrest and political difficulties".
Given recent "sensitivities" over the subject, any discussion on tax matters would carry "a big statement that any modification has to be agreed by unanimous consent", she said.
Ms Lagarde, who will present her presidency plans to financiers in the City of London today, said her priority was a trio of regulatory measures intended to help restore stability to financial markets or at least prevent future turmoil.
During the next six months, France would try to ensure that ratings agencies were subjected to EU scrutiny, that the Basle II capital requirements for banks were supplemented with liquidity requirements and enshrined in EU legislation and that there was better co-ordination between European market supervisors.