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Treasury rebuffs idea for direct EU taxes

Treasury rebuffs idea for direct EU taxes

Category: Money

Updated: 10/08/2010
First Published: 10/08/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The EU wants to push through plans that would give it the right to levy taxes directly from its member states and their citizens, including in the UK.

The Budget Commissioner of the EU, Janusz Lewandowski, has announced he will unveil a plan next month for direct EU taxes.

If his proposals get the go-ahead, new taxes on bank transactions, air travel and CO2 emissions created through energy use could all be introduced.

It is feared any such tax on CO2 emissions would see utility bills soar higher and further rises in petrol prices.

A swift rebuttal of the idea has been forthcoming from the Treasury, which has promised to study the plans but veto any proposal it deems as unacceptable.

"The Government is opposed to direct taxes financing the EU budget," said Treasury Minister Lord Sassoon.

"The UK believes that taxation is a matter for member states to determine at a national level and would have a veto over any plans for such taxes."

However, it is thought that there will be backing for the proposals from some of the EU's other influential members, including Germany.

The EU says that in return for opening themselves up to direct taxes, member states would see the fixed contribution that they pay to the EU budget be reduced, thereby helping them to improve their own budget deficits.

The size of the contribution paid depends on the gross domestic product of the state and the amount of tax it raises through sales of goods and services (VAT).

Of all the member states, Germany paid the largest contribution this year of around £17.5 billion.

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