Richard North, 06/09/2004  

There is no way at all that the EU can harmonise corporation tax rates, oh no…

So, on the trail of socialist Pervenche Beres, the new chairwoman of the European Parliament's economic and monetary affairs committee - who last week said that France and Germany should block the next EU spending plan if the new East European member states do not hike up their corporate tax rates – comes French economy minister, right winger Nicolas Sarzozy.

On France's TF1 television last night, he proposed withholding structural funds from any member state with lower than average tax rates. "One can't allow in Europe that some countries say 'we're sufficiently rich to lower our taxes' - to as low as zero in some cases - but at the same time ask the countries of old Europe to pay structural funds that we could use for our regions," Sarkozy said.

So, in the absence of formal tax harmonisation, which can be opposed by other "old Europe" members – especially Britain - the "colleagues" are resorting to different tactics, blackmail, the effect of which is to secure, er… tax harmonisation.

The thing to note about all this is that there are many ways of skinning a cat. Just because tax harmonisation is not in the constitution does not mean that it cannot or will not happen.

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