PM against a common European tax base

PRIME MINISTER David Cameron has signaled outright opposition to EU plans to develop a common corporate tax base during Prime Minister's Question Time in the Commons.

He told MPs: "It is important that we keep our competitive tax rates and do not give the EU further coverage over our tax base."

Cameron, replying to a question from Conservative MP James Clappison, said: "There is no case for giving the EU powers over taxation."

The Eurosceptic demanded an assurance "that the government will simply say no to the proposed EU directive for a common corporate tax base".

Cameron said: "Those in the EU who want to see further tax harmonisation usually make one of two arguments: either they want to raise more money for the EU, which I do not agree with, or they are trying to reduce tax competition within the EU, which I also do not agree with."

His declaration co-incided with a statement from Scottish Secretary Michael Moore brushing aside a call from newly-elected Scottish First Minister Alex Salmond, whose Scottish National Party has just won the Scottish Parliament election, for control over corporation tax north of the border.

Moore said Salmond had failed to state whether he wanted to control a separate rate of the tax on business in Scotland or the size of its business tax base, or make out a detailed case for more tax devolution.

He said that the UK government's plans are limited to devolving control of over 10% of income tax in Scotland, with power to raise or lower income tax rates by up to 10p in the pound.

This is being done under the Scotland Bill, which is about to complete its passage through the Commons to then face consideration in the Lords.

Salmond has made it clear that he believes his victory gives his demand for more tax devolution legitimacy. He has said he also wants control over duties on alcohol and the revenues from the Crown Estates in Scotland.

Northern Ireland has been lobbying for control over corporation tax so it can reduce the rate in Ulster to counter the effect of lower corporation tax in Eire.