Charlie McCreevy, European Union internal market commissioner, on Thursday dismissed calls to harmonise national tax regimes, arguing that it was “healthy” for national governments to compete for foreign investment by offering low corporate tax rates.
“Tax harmonisation is not on the agenda, nor will it be,” Mr McCreevy said in a speech in Brussels.
“National vetoes will be retained and competition between member states for inward investment - some of it tax based - will continue. Tax competition is a healthy spur to governments across Europe,” he said.
But Mr McCreevy also voiced criticism of the Commission’s narrower drive to harmonise the corporate tax base, a move expected to simplify tax calculations and increase transparency but which some fear would pave the way to harmonisation of rates. Lazlo Kovacs, EU tax commissioner, revealed last month that he plans to formally propose a single EU tax base within 3-4 years.
“I am emphatically opposed to tax harmonisation - be it by the front door or the back,” Mr McCreevy said.
Mr McCreevy stressed that the obstacles standing in the way of a harmonised tax base were virtually insurmountable: “To establish a common tax base we will need first to get agreement on what constitutes taxable profits. Assuming we can agree on [this] during our lifetime, we will probably then have completed one third of the journey. The harder bit comes next.”
It is rare for commissioners to publicly cast doubts over the policies of their colleagues, but Mr McCreevy said: “I didn’t come to the Berlaymont [the Commission headquarters] to tiptoe about in my slippers. I do not believe either in walking down the corridor with a blindfold on, muffs on my ears, or a muzzle on my mouth.”