Proposals put forward by paymaster general Dawn Primarolo for an alternative to the European-wide withholding tax have been criticised by European Commissioner Frits Bolkestein, on a visit to the UK.
Last week Primarolo attempted to ease the current impasse by suggesting a system of automatic information exchange in order to tackle tax evasion – which the UK’s fellow member states say is their motive for supporting the tax.
The British scheme would involve routine disclosure of information from payers of interest to their domestic tax authority, which would be passed on to other tax authorities. It would also be necessary to include countries outside the EU, which would require the abandonment of banking secrecy in certain states to ensure an equal exchange of information.
But Bolkestein, who yesterday met chancellor Gordon Brown, claimed that at least ‘two and possibly more member states are not prepared to accept that’.
He also claimed he was not in the UK to try and impose the withholding tax on the government, which has emphatically rejected the idea because of its effect on the City’s lucrative eurobond market.
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