| 8.4°C Dublin

EU president wants to see a new Euro tax

IRISH taxpayers will be hit by a new Euro tax which will be introduced to fund the expanding Brussels bureaucracy if new EU president Herman Van Rompuy gets his way, the Sunday Independent can reveal.

The former Belgian prime minister will put his weight behind controversial proposals already floated by the commission's head, Jose Manuel Barroso, for a 'Euro tax' when he assumes his new role on January 1.

It would result in a stream of income direct to Brussels, funding budgets that critics say are already rife with waste and overspending.

The news was met with some scepticism by the Department of Finance last night who said that taxation matters remain the responsibility of member states and there is no agreement to change that situation.

Mr Van Rompuy, 62, who was appointed to the newly created €350,000 post at last week's EU summit, set out his stall on direct Euro taxes during a private speech at a recent meeting of the Bilderberg group of top politicians, bankers and businessmen.

The group officially meets in secret, but when details of his remarks leaked out, his office was forced to issue a public statement on his behalf.

"The financing of the welfare state, irrespective of the social reform we implement, will require new resources," he said. "The possibility of financial levies at European level needs to be seriously reviewed."

Mr Barroso, whose commission acts as the European Union's executive arm and civil service, has set out alternative plans for a Euro tax that would involve Brussels taking directly a fixed percentage of VAT and fuel duties.

Supporters say it would take a fixed proportion of the existing tax revenue rather than increase it overall, and make the cost to taxpayers of running the EU more transparent. Critics argue this could backfire by increasing anti-Brussels sentiment.

Mr Van Rompuy has not set out in detail exactly which mechanisms he favours most, but after the meeting his spokesman said he would look favourably on either green taxes or a version of the Tobin Tax, proposed in 1972 by US economist James Tobin as a tax on currency speculation.

Any move to introduce any direct taxation to Brussels is set to be fiercely opposed by David Cameron's Conservative party in the UK, which has maintained its hardline Euro-sceptic stance.

"Competition in Europe depends on member states being allowed to have competitive tax regimes," said Timothy Kirkhope, leader of the Tory MEPs.

Opponents could underestimate Mr Van Rompuy's determination. Ostensibly chosen for his skill as a consensus-builder, he is also a ruthless political operator.

Sunday Independent