November 30, 1998. Copyright 1998. Graphic News. All rights 
reserved.

BRITAIN THREATENS EU VETO
By Margot Nesdale

LONDON, November 30, Graphic News: A FRESH row is looming over 
plans to harmonise tax rates across the European Union with heads 
of state about to meet in Vienna over the controversial issue.
	The Labour government has promised to use its veto to block any 
attempts by Brussels to impose tax rates on Britain in the wake 
of public outrage.
The tax policy Ð being pushed by GermanyÕs new hardline finance 
minister Oskar Lafontaine Ð could add billions of pounds to taxes 
in Britain and force it to levy VAT on goods currently exempt 
like food, childrenÕs clothing, books and newspapers.
BritainÕs tabloid newspapers have interpreted the initiatives as 
a major threat to zero VAT rated goods, with headlines like ÔEuro 
taxmanÕs grab for the groceriesÕ.
EU finance ministers signed up to a three-part strategy last 
December to combat ÔharmfulÕ taxation, including banning certain 
discriminatory corporate tax regimes.
The strategy includes introducing a minimum tax on EU residentsÕ 
savings held in other EU countries in order to avoid domestic 
taxes.
Tax policy Ð a key focus of the summit on December 11Ð will be 
one of the dominant themes of the German presidency of the EU, 
which runs for six months from January.
Mr Lafontaine has said that Bonn would push hard for an agreement 
on tax harmonisation during its reign. He reiterated recently 
that Germany was opposed to countries obtaining unfair advantages 
through relatively low tax rates.
British Government sources have said that while it is 
co-operating with the EU to end elements of tax competition that 
distort the smooth running of the single market, it would block 
measures which would damage British business.
A spokesman for Prime Minister Tony Blair said this week that the 
Government stuck to its tax promises and no-one was proposing any 
changes to VAT.
The Government has also promised to stop the introduction of a 
so-called withholding tax, which could damage LondonÕs lucrative 
eurobond business.
/ENDS