Pressure for Common Tax Base Continues

According to AFP, the finance ministers of France, Germany and Poland discussed the linkage during a meeting on Monday, and it appears that Poland has now given its tacit backing. Polish Finance Minister Andrzej Raczko told journalists that harmonization is necessary for business to run in Poland, Germany and France, adding, harmonization "is an issue Poland also should be interested in." This will add pressure on countries like Estonia, as it breaks the conception that the issue was Germany and France versus the new EU members. It was Estonia that came directly into the firing line of French finance minister Nicolas Sarkozy who pressed the link between assistance and tax rates. "I am thinking of our Estonian friends who have put their tax rate at zero," he said. "How can you ask for lots of structural funds and have a fiscal policy at zero. Who can understand that?" The 10 new EU member states generally have very low levels of corporate tax in order to make their economies more attractive for company investment. Estonia has a zero percent rate for reinvested earnings while Latvia, Lithuania and Cyprus level tax at 15 percent and Poland at 19 percent. (EUobserver.com)