Italy/EU: The Government's campaign to retain the national veto on all tax issues in the EU's new constitutional treaty has received a setback after Britain signalled that it was softening its position on the issue, writes Denis Staunton in Rome.
Britain's Foreign Secretary, Mr Jack Straw, said in Rome that his government could accept the introduction of majority voting on tax issues concerning cross-border fraud.
"Majority voting operates only once, by unanimity, the relevant council has decided that an issue raises questions of the administration of the tax system or cross-border fraud. We want to make sure that the whole of the relevant article, with the exception of some possible details related to cross-border fraud, is covered by unanimity," he said.
Mr Straw was speaking after the launch of an Intergovernmental Conference (IGC) to draw up a new constitutional treaty for the EU.
Earlier, the Taoiseach, Mr Ahern, told other EU leaders that Ireland was determined to resist any move to abolish the national veto on any tax issue.
"We strongly believe that unanimity should continue to apply as in the present treaties to all aspects of tax issues in the Union's competence. Tax issues are fundamental to the relationship between citizens and their elected national governments," he said.
Taxation is one of only a handful of issues where the Government is calling for changes to the draft constitution drawn up by the Convention on the Future of Europe. The Government has been counting on the support of Britain, Sweden and a number of the EU's new member-states but London has until now been seen as Ireland's strongest ally on the issue.
The Minister for Foreign Affairs, Mr Cowen, made clear that, despite Mr Straw's comments, the Government's position remained unchanged.
"Our position has been pretty simple up to now and as you know we don't indicate a negotiating position that would suggest any movement from our present position. Ireland is to the forefront of being major opponents of tax harmonisation," he said.
A spokesman for the Minister for Finance said last night that while Ireland had always been conscious that the UK position was the same as ours, any change in the UK position would not change the Irish view.
Article III-63 of the draft constitutional treaty states: "Where the Council of Ministers, acting unanimously on a proposal from the Commission, finds that measures on company taxation relate to administrative co-operation or combating tax fraud and tax evasion, it shall adopt, by a qualified majority, a European law or framework law laying down these measures, provided that they are necessary for the functioning of the internal market and to avoid distortion of competition. That law or framework law shall be adopted after consultation of the European Parliament and the Economic and Social Committee."
Some EU member-states have long argued that Ireland's low corporate tax rate amounts to unfair tax competition that distorts the EU's internal market. The Government fears that any erosion of the principle of unanimity on tax issues could lead eventually to tax harmonization across the EU.
Mr Michel Barnier, one of the Commission's representatives at the IGC, suggested that, by identifying only a few specific exceptions, the draft article was effectively guaranteeing unanimity on all other tax issues. "If it is just progress for fraud and one or two specific grounds, it is a guarantee for the Irish," he said.