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Slovakia's centre-right government had hoped for the new German government's support for a more "liberal" approach to the European economy but Chancellor Merkel’s latest attacks on low taxes in some new member states point to the opposite, reports EurActiv.sk
On her visit to Paris, Brussels and London, Mrs. Merkel attacked low taxes in some new member states, hinting at the possibility of cutting EU regional funding for those countries. "Member states are free to decide on their tax laws. But they have to be ready to forgo fully the resources granted from the structural funds," the new German government's programme
says (line 987 - 994).
The CDU’s Bavarian sister party, the CSU, has already argued against "tax dumping" in the 2004 elections to the European Parliament. In an appraisal
of the the present coalition's programme, the CSU claims broadly to have "got all of our positions through concerning the Eastern Bavarian border regions ", which border the Czech Republic, namely: "Subsidy differences between Bavaria and the Czech Republic are limited to 20 percent. Member states dumping taxes will be punished with cuts in structural funds."
The post of finance minister in the new German government is occupied by Peer Steinbrück, a member of the SPD of former chancellor Gerhard Schröder.
Germany already has the lowest tax quota of all EU countries - with the exception of Slovakia.
The Slovak ministry of finance has warned against an adoption at EU level of what it calls the German proposal of "punishing low taxes". Slovakia even says it is taking the issue seriously enough to consider blocking a deal on the Financial Perspective, even though the country has just signed, together with Poland, the Czech Republic and Hungary, a letter to UK Prime Minister Tony Blair stressing the importance of the Financial Perspective for poorer EU countries and urging Mr. Blair to broker a deal before the end of 2005.
Slovakia is - together with the Czech Republic, Estonia, Ireland and the UK - one of five countries openly opposed to the Commission's proposal for an EU-wide harmonisation of the tax base for corporate taxes.
Peter Papánek, a spokesperson with the Slovak ministry of finance, said: "We are surprised. When Mrs. Merkel visited Slovakia, we had an impression that she was convinced by the Slovak system. The proof was the fact that she campaigned with the idea of a flat tax." But this was an idea of Mrs. Merkel's then tax expert Paul Kirchhoff, who quit the Merkel team shortly after the elections.
Analysts say Mrs. Merkel is in a changed position now. "She has to defend German national interests. I think she would demand it even if she were at the helm of a different coalition,” says Michael Petráš, an expert on German politics with the Friedrich Ebert Foundation in Bratislava.
Questions concerning EU finances will be at the top of the agenda when Angela Merkel visits Poland on 2 December. She has also been invited to visit the Czech Republic before Christmas.
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(23 November 2005)
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