- 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
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
"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
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
On Monday, the EU Economic Commissioner, too, criticized the French
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