Direct EU taxes idea rejected by UK, France and Germany

Euro notes The power to levy taxes is seen as a sovereignty issue by member states

France and Germany have joined the UK in rejecting the idea of the EU levying taxes directly.

However, officials in Austria and Belgium have taken a positive view of the EU budget commissioner's idea.

With its own income the EU would be "fairer", Belgium's Budget Minister Melchior Wathelet said.

Earlier, France's Europe Minister Pierre Lellouche called the EU tax idea "perfectly ill-timed". He said the EU ought to be planning cutbacks now.

The EU Budget Commissioner, Janusz Lewandowski, told the daily Financial Times Deutschland on Monday that he would present some options next month for direct EU taxes.

He said the burden on national budgets could be eased if the European Commission were able to levy direct taxes.

EU taxes on aviation, financial transactions and CO2 emission permits could be considered, he said.

Governments unimpressed

There were frosty reactions from the UK, France and Germany - all net contributors to the EU budget.

British treasury minister Lord Sassoon said the British government was "opposed to direct taxes financing the EU budget".

He said: "The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes."

A spokeswoman for German Finance Minister Wolfgang Schaeuble said: "We reject an individual tax-raising competence for the EU."

German news website Spiegelonline said there was rare unity among the main German parties in rejecting Mr Lewandowski's idea - except for the Greens.

According to Mr Lellouche, "The idea of a European tax raises fundamental political issues and would constitute a very big transfer of sovereignty."

But in Austria a spokesman for Finance Minister Josef Proell said: "We take a positive view of the Lewandowski announcement."

Hard bargaining

Historically, national governments levy taxes in the EU.

The 27 EU member states pay a fixed contribution to the EU budget, based on their gross domestic product and a percentage of their sales tax (VAT).

This year Germany's transfer to the EU budget - the largest contribution - is about 21bn euros (£17.5bn).

Some countries, including the UK, get rebates - and there is expected to be hard bargaining over those sums later this year.

The European Commission has run into opposition from member states over its plea for an increase of nearly 6% in the EU budget for 2011 compared with this year.

Traditionally taxes are seen as a prerogative of nation states and any move by the commission to levy taxes directly is likely to be opposed by eurosceptics wary of Brussels's powers.

The EU's budget for this year is 122.9bn euros (£110bn) - nearly half of which is allocated to agriculture and natural resources. It is 6% bigger than the 2009 budget.

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