McCreevy criticises EU tax base plan

EU commissioner Charlie McCreevy sharply criticised plans to harmonise the tax base across Europe yesterday in a move that could create a rift with his some of his colleagues.

Mr McCreevy, who regularly railed against tax harmonisation proposals from Brussels when he was Ireland's finance minister, reiterated his emphatic opposition to the concept, and described tax competition as a healthy spur to governments across Europe.

He said the current EU plan by taxation commissioner Laszlo Kovacs to harmonise the corporate tax base throughout the EU was simply bringing tax harmonisation in through the "back door". He also suggested it was not universally popular within the European Commission.

"Nor does the commission as a whole believe that levelling up tax in the direction of harmonisation offers any solution to the problems now confronting Europe," he said.

Mr Kovacs, who announced his tax strategy last week, wants to create a common basis for calculating taxable income rather than harmonising actual rates to make it easier for companies conducting pan-European business. However, several member states, including the Republic and the UK, believe the tax base harmonisation proposal could be the first step toward harmonising rates and are opposed to the measure.

A spokeswoman for Mr Kovacs said it was strange for Mr McCreevy to object to the proposal considering he had been among the finance ministers that gave the green light for technical work to start on the strategy at an Ecofin meeting in September 2004. "This proposal has nothing to do with tax rates but will cut costs for businesses," she added.

In a colourful speech in Brussels at PricewaterhouseCoopers, Mr McCreevy, while acknowledging that he now has no direct role in the taxation area, said he had not come to Brussels to "tiptoe around in his slippers".

"I do not believe in walking down the corridor with a blindfold on, muffs in my ears, or a muzzle on my mouth," said Mr McCreevy. "If I sense there are potholes ahead, I want to spot them before I walk into them- and point them out to others."