Ireland and Britain seem set to win the right to keep national vetoes over tax matters in a proposed European Union constitution after the Italian presidency backed them today.
EU foreign ministers were meeting in Naples today for talks designed to break the deadlock over the bloc's new draft constitution.
The EU has also been divided over tax harmonisation. The draft text of the constitution called for issues related to fighting tax fraud to be decided by majority voting.
But some states, led by Ireland and Britain, say only unanimous agreement is acceptable on any aspect of tax policy, giving each of the 15 current and 10 future member states the right of veto.
The Minister for Foreign Affairs, Mr Brian Cowen told a briefing after the talks Ireland could not approve the draft text, even as it was amended by Italy this week.
"The Convention text as it stands at the moment wouldn't meet with our approval at this stage. The presidency noted the strong position we took on it," Mr Cowen said.
"We have made particular choices on personal and corporation tax in Ireland and we strongly believe that those choices have helped to drive our economic success, which has benefited our society as a whole."
One participant said Mr Cowen had been unusually forthright in presenting his case, saying he would not sign the treaty without unanimity on tax and "there is not a cat's chance in hell of it being ratified in Ireland if we did".
At his briefing he was more measured, saying merely: "We've made it clear that as it still stands it's not acceptable."
British Foreign Secretary Jack Straw told fellow ministers there were clear advantages to competition between different tax regimes, especially in a global economy, a British official said.
An EU diplomat said Italian Foreign Minister Franco Frattini summed up the talks on the issue by saying there were two camps but the majority seemed to feel unanimity was required.