Brown prepared to veto European tax regime

Chancellor Gordon Brown will veto any attempt to harmonise British taxes with those in other members states of the European Union.

Although Brown signed up to a document called ‘The New European Way’, committing Left-leaning governments – now the majority in the EU – to closer economic co-operation, the paper did not state this should move control of British taxes from Whitehall. German and French finance ministers Oskar Lafontaine and Dominique Strauss-Kahn claimed the agreement will mean moves towards a centralised European tax regime.

But Brown made clear that cutting business taxes was the way to jobs and growth. He added: ‘We have a veto and we will not hesitate to use it.’

Maurice Fitzpatrick, Chantrey Vellacott DFK’s head of economics, warned harmonisation would add the equivalent of 30p to the basic rate of income tax.

‘The UK government currently takes 38% of the national income in tax, while the countries joining the single currency next year take 45% on average. This 7% difference would bring in #60bn – the same as 30p in the pound on the basic rate of income tax,’ he said.