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Slovak--French face-off

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  • Martin Votruba
    French Finance Minister Nicolas Sarkozy proposed that the European Union abolish its program of financing regional development in Slovakia and some other new
    Message 1 of 1 , Sep 6, 2004
      French Finance Minister Nicolas Sarkozy proposed that the European Union
      abolish its program of financing regional development in Slovakia and some
      other new members on grounds of their low taxes. The tax rates make them
      more competitive for foreign investment than, e.g., France. Slovakia has
      a 19% flat tax rate (effectively doubled by a 19% value-added tax paid on
      all the purchased goods). Monday's French agency report recorded the
      Slovak reaction:

      Reacting to the proposal, Slovak Finance Minister Ivan Miklos said
      that his country opposed it, adding that tax competition was an
      incentive for the economic reforms required to strengthen the
      bloc's competitiveness.

      "It seems that Mr. Sarkozy wants to find a way of punishing
      countries which successfully implemented necessary reforms,
      favorable for the whole European Union," he said in a statement.

      Miklos also pointed out that the initiative had no basis in the EU's
      current legislation.

      Slovak Economy Minister Pavol Rusko also hit out at the suggestion.

      "Instead of implementing reforms that are require political
      courage, they (French leaders) begin to interfere without any basis
      in the internal affairs of other countries," Rusko told AFP.

      "This initiative is nonsense and comes from pure populism from
      French politicians," he added. [...]

      The low corporate tax rates in several of the 10 countries which
      joined the European Union earlier this year has been a hot-button
      issue, with German Chancellor Gerhard Schroeder and French
      President Jacques Chirac vowing in May to work together to
      harmonize tax rates in order to prevent what they see as fiscal
      dumping rates by new member states.

      But tax harmonization is opposed by other old EU members,
      especially Britain which is vehemently against alignment of tax
      rates.

      On Monday, the EU Economic Commissioner, too, criticized the French
      proposal.


      Martin

      votruba "at" pitt "dot" edu
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