The EU Commissioner for Internal Market and Services, Charlie McCreevy, has warned that consolidation of the EU's tax base is likely to present many difficulties.
In a speech to a KPMG tax conference in Naas this evening, Commissioner McCreevy said that the issue of tax rates across the EU could not be separated from the issue of the tax base.
He said that a consolidated tax base would divide up the EU corporate tax base in a way that favours some member states over others, and would risk negating many of the benefits enjoyed by members states that have current low rates.
'If the process helped some of the member states with the highest current rates and the highest budget deficits, the argument for such a common base might be sustainable,' the Commissioner said. 'But the truth is that whatever benefit might accrue to the high taxers in the short term would be quickly wiped out by the negative impact on economic performance of tax convergence and higher effective tax rates in the EU as a whole,' he said.
'The successful low tax economies would be dragged down instead of the less successful high tax ones being brought up,' he added.
Mr McCreevy also warned that at a technical level, agreeing rules for a common tax base would be a major task, notwithstanding the common accounting standards now applying across the EU.
