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Britain set to clash with Europe over proposal for EU-wide tax

THE European Commission is to propose a new EU-wide tax to enable it to boost its spending even though many national governments are imposing cuts to reduce their deficits.

Britain will lead the opposition to the planned tax, with British Prime Minister David Cameron warning that the Commission must "cut its cloth" in the same way member states are doing. He wants a freeze in EU spending but Brussels is expected to push for a rise of about 2pc.

Options for raising the extra cash include a "green" tax from the revenues of the EU's carbon trading scheme; a levy on airline tickets; or a tax on all financial transactions, dubbed a "Robin Hood" tax, which the British government argues could work only if it were introduced globally.

The Commission will today discuss its blueprint for how it will be funded from 2014-20. Its €125bn annual budget, funded by a small slice of VAT revenue in member states, has had to be topped up by national governments and it wants more money to put it on a stable footing. It will be presented to party leaders in the European Parliament in the next two days and then published.

Manuel Barroso, the president of the Commission, will argue that the plan would not amount to a direct tax for Brussels because the money raised would be deducted from member states' contributions. But British ministers believe the move will prove to be a presentational own goal since it is bound to be viewed as a new "EU tax" by the media.

"We will not be alone in opposing this," said one British government source. "It's the wrong idea at the wrong time. The EU must live in the real world. People will not understand why it needs to spend more when their own governments are having to spend less."

However, poorer member states who are net beneficiaries from the EU budget may back the plan. Some hope that EU spending -- for example, on building projects in deprived areas -- will help to fill the gap left by cuts at national level.


Mr Cameron will come under pressure from Eurosceptic Conservative MPs to veto the commission's budget plan when EU leaders discuss it.

Priti Patel, a member of the executive of the 1922 committee of Tory MPs, said last night: "For such an untransparent organisation like the European Commission to propose to spend more taxpayers' money is deeply concerning. I hope the prime minister will stop it. I am sure he is up for the fight."

Mr Cameron will also be anxious to preserve the rebate on Britain's contributions to EU coffers won by Margaret Thatcher in 1984, which is bound to be targeted by other EU states.

A battle also looms over the EU's budget for 2012, which has not been agreed. Britain is again calling for restraint.

If no deal is reached by the end of December, spending would remain at this year's level. (© Independent News Service)

Irish Independent