Germany, France urge EU to speed tax coordination

January 27, 2012, 12:00 / Industry News / Jurisdictions: European Union, Germany, France, Source: AFP

Germany and France are pushing the European Union to speed up tax coordination efforts, despite British and Irish opposition, and will soon make proposals to harmonise their corporate tax rates.

Europe's top economies made their call in a document, titled "Ways out of the crisis -- Strengthen growth now!", that will contribute to discussions at EU summits on January 30 and March 1-2.

The text makes a series of proposals to revive the stalling economy in the 27-nation bloc and makes new appeals for a financial transaction tax and a common corporate tax base.

EU institutions and governments "should accelerate the process of tax coordination in order to foster growth, removing obstacles to the functioning of the single market and preventing tax abuse and harmful tax practices," the document says.

Berlin and Paris say negotiations on European Commission proposals for a common consolidated corporate tax base, the financial transaction tax and energy tax rules should speed up.

"In order to set the stage for enhanced tax coordination, France and Germany express their support for the European Commission's proposal on a common system of financial transaction tax," the document says.

The text says the two nations will unveil proposals to synchronise their corporate taxes by the end of February. Britain, home to three-quarters of the financial services sector in the EU, and Sweden oppose the financial transaction tax for fear that it will drive the business away from Europe.

Ireland, which says its low, 12.5-percent corporate tax rate is vital to its economy, and Slovakia are against a common business tax base.

France and Germany announced last year that they would harmonise their corporate tax bases in 2013 but there were some recent tensions over the financial transaction tax.

France indicated earlier this month that it would implement its own financial transaction tax if it cannot convince other European partners to join the effort.

Germany, however, wants an agreement to be reached at the very least in the 17-nation eurozone to ensure equal treatment.

With unemployment stuck at around 10 percent in the eurozone, the Franco-German document also calls for measures to get more people back to work in Europe.

EU states should direct their national employment agencies to "make a concrete offer to every unemployed (person)" for a job, apprentice contract or further training "within a certain period."

Governments should also find ways to reduce the tax burden on labour and encourage the mobility of workers across borders.

In order to help nations receiving financial bailouts, like Greece, Portugal and Ireland, Paris and Berlin propose the creation of a "fund for growth and competitiveness" for such countries or those "facing serious structural challenges."

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