Select Committee on European Communities Fifteenth Report


249. Taxation, whether direct or indirect, is a highly sensitive issue, and there is a clear need to ensure that proposals on tax matters emanating from the institutions of the European Union are properly publicised and accurately reported. We conclude that recent scare headlines about a European Union tax take-over were unjustified, and ill served a British public insufficiently informed of the facts to judge the validity of the reporting.

250. This Report, in examining carefully those tax proposals already placed on the table by the Commission and some which are as yet only mooted, seeks to measure their appropriateness and the impact they are likely to have on the United Kingdom. Three principal conclusions are drawn:

  • that there are certain areas where some sensible, well-justified co-ordination—in particular to reduce fraudulent tax evasion and to help create conditions in which tax competition can be pursued harmlessly—could serve both United Kingdom and EU-wide interests, and ought therefore to be pursued in a spirit of pragmatism rather than being dismissed out of hand on purely dogmatic grounds;
  • that as long as the Government maintains its insistence on the unanimity rule in decision-making (except for purely administrative matters) and on the principle, shared by all Member States, that national taxes raising revenue from domestic taxpayers are a strictly national matter, such proposals as are already on the table can pose little or no threat to the interests of the United Kingdom; and
  • that the Government must nonetheless remain permanently vigilant to ensure that undesirable tax measures are not smuggled through the back door.

251. Within these parameters we believe that pragmatic tax co-ordination and fair competition can not only co-exist but complement each other, to the greater benefit of taxpayers within the European Union.

252. The Committee considers that the issue of taxation in the European Union raises important questions to which the attention of the House should be drawn, and makes this Report to the House for debate.

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