Gordon Brown Claims Victory in EU Tax Exemption Battle

Strategic Insights -

The UK government, led by Chancellor Gordon Brown, has claimed victory in its three-year battle to exempt the City of London's international bond business from a new European Union savings tax. The deal, approved by EU finance ministers, allows member states to opt for a British scheme of information exchange instead of the proposed "withholding tax" on savings accounts and bonds. This decision was seen as a demonstration of Britain's determination not to surrender its veto over taxation at the upcoming Nice summit.

Key Takeaways:

  • Ten EU countries have chosen the British proposal of exchanging information, while five have opted for the original German-backed idea of a withholding tax.
  • The directive will not come into full force until Switzerland, the United States, and other banking centres agree to similar rules on information exchange.
  • Britain will not levy any new EU-level tax and will exchange taxation information on savings interest only with those member states which pass information to Britain.
  • Chancellor Gordon Brown stated that the wave of support for harmonising taxes has ebbed, and Britain's proposal was once considered unacceptably.
  • Britain has reaffirmed its resistance to any moves towards majority voting on taxation in the Nice Treaty next month.
  • The Government has been described as "absolutely resolute" on the issue by Chancellor Gordon Brown.
  • Shadow Chancellor Michael Portillo has dismissed the Government's pledge as a tactical manoeuvre, highlighting concerns that Labour is creating a "straw man" by highlighting taxation to divert attention from other concessions.
  • European Commissioner Michel Barnier has played down expectations of major shifts in the EU balance of power after the Nice summit, predicting failure to agree on other areas of reform.

Statistics:

  • 10 EU countries have chosen the British proposal of exchanging information.
  • 5 EU countries have opted for the original German-backed idea of a withholding tax.
  • 3 years have passed since Britain first suggested the proposal for exchange of information.
  • The British government will not exchange taxation information with member states unless they pass information to Britain.
  • 12 areas of taxation and reform will be discussed at the Nice summit, including tax, social security, border controls, immigration, defence, and Treaty changes.

Sources:

  • "Gordon Brown claims victory in EU tax exemption battle" (The Guardian, date unavailable)
  • "Brown wins tax battle" (BBC News, date unavailable)
  • "EU tax deal depends on Switzerland and US" (Financial Times, date unavailable)
  • "Brown 'puts taxpayers first'" (The Times, date unavailable)