EU demands new tax raid against Britain

EU demands new tax raid against Britain
By James Chapman and Tim Shipman
13 November 2010, 11:36am

The European Parliament has launched a controversial new power grab, demanding the right to make tax raids on Britain.

MEPs said they would approve a 2.9% rise in the Brussels budget – demanded by David Cameron rather than the 6% originally proposed – but only if they get powers to raise taxes.

At present European funds come from member state governments but now the European Parliament wants to tax individuals across Europe directly to pay for its pet projects.

The demands, quickly labelled outrageous, have plunged negotiations over this year's budget into deadlock.

The Prime Minister held emergency talks with his counterparts from France, Germany and Italy yesterday to face down the demands.

Mr Cameron broke off from the G20 summit in Seoul, South Korea, after Brussels tried to impose a string of conditions if it gives up the 6% budget increase it wants next year.

The Prime Minister said Nicolas Sarkozy, Angela Merkel and Silvio Berlusconi had been 'extremely staunch'.

Eurosceptics warned that the audacious bid to tax individuals is evidence that Eurocrats are still determined to seize new powers from member states.

Mr Cameron said he would be 'perfectly content' if MEPs – who voted by a huge majority for an inflation-busting 6% rise – kept on refusing to back the 2.9% deal.

The European Parliament must vote again on the limited increase, which will still cost the British taxpayer an extra £435m, while the European Council, made up of EU leaders, also has to agree.

If the Parliament refuses to accept a 2.9% increase, the EU would have to make do with last year's budget – paid month by month – until an agreement can be reached.

Such an outcome would mean Mr Cameron getting the budget freeze he tried but failed to negotiate at a summit in Brussels a fortnight ago. 'I have always said that a freeze is a perfectly good outcome – in fact, in many ways it would be a better outcome,' the Prime Minister said.

'You just take last year's budget, divide it up into 12 parts and section it out over the year.

'Talking to Nicolas Sarkozy, Angela Merkel and Silvio Berlusconi, we signed that approach of limiting the budget to a 2.9% increase and we are sticking with that approach, and that is very, very firm indeed.

'They were extremely staunch when I asked them to be.' The new demands for tax-raising powers come after auditors refused to sign off the EU's accounts for the 16th successive year because of fraud and error.

Tory MP Douglas Carswell said: 'It would be appalling to give Eurocrats the power to raise taxes directly in any case but they can't even spend what they do get already in a responsible fashion.'

Sian Herbert, of Open Europe, which campaigns for EU reform, said: 'Virtually no one in the real world thinks this is a good idea.

'The Government needs to stick to its guns and make it completely clear to MEPs that a discussion about an EU tax is off the table.'

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