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Thursday, December 3, 1998 Published at 21:11 GMT

UK Politics

Blair flies into Euro tax row

Prime Minister Tony Blair: Opposed to EU tax

UK Prime Minister Tony Blair's meeting with French ministers in the Brittany resort of St Malo is likely to be dominated by the ongoing dispute over whether or not tax levels should be set by the European Union.

Mr Blair will be keen to place the UK at the heart of any agreements on issues under discussion at the summit, including defence, small businesses and tackling the Millennium computer bug.

But it is the row over EU tax powers that is threatening to ruin his attempts to place the UK at the 'top table' of Europe.

France and Germany - after a recent statement by Chancellor Gerhard Schröder have both come out in support of dropping the existing requirement for the unanimous agreement by EU member states on tax issues.

EU reform

The UK is strongly opposed to any such move, which would effectively deprive dissenting states of their power of veto. It also potentially opens the way for the setting of Europe-wide tax bands.

Thurday's meetings will see the prime minister and President Jacques Chirac discussing defence, foreign affairs and Agenda 2000 - a programme of reform of EU budgets and structure.

[ image: Jacques Chirac and Gerhard Schröder: Want greater EU tax powers]
Jacques Chirac and Gerhard Schröder: Want greater EU tax powers
British and French defence ministers will also meet, as will Minister for the Environment, Transport and the Regions John Prescott and French Transport Secretary Jean-Claude Gayssot.

On Friday, Foreign ministers will hold talks, with Kosovo and Iraq high on the agenda, and UK Chancellor Gordon Brown is meeting his French counterpart Dominique Strauss-Kahn

Mr Blair's Friday agenda includes discussions of improved transport links, Millennium bug policy, cross-Channel electricity connectors and the Channel Tunnel with French Prime Minister Lionel Jospin.

'UK not isolated'

The battle lines over tax were already being drawn before Mr Blair left, with his spokesman keen to downplay any suggestions that the UK was once again isolated in Europe.

He produced a list of eight EU countries - Spain, Sweden, Denmark, Finland, Ireland, Greece, Luxembourg and the Netherlands - which had expressed concerns over abandoning unanimous approval and Europe-wide tax bands.

[ image: Saving grace: Duty-free could win a reprieve]
Saving grace: Duty-free could win a reprieve
"The notion that Britain is isolated is completely and totally and utterly ridiculous," he said, adding that Mr Blair was seeking to strengthen relations with France.

"We will show that in 18 months we have transformed relations with France and they are extremely good and strong," he said.

In the course of the meetings, Mr Blair is expected to win a reprieve for Duty Free allowances within the EU-zone. They are scheduled to be abolished by 30 June 1999.

Germany is likely to support postponing the move, as are Greece and Ireland.

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