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Thursday, 9 December, 1999, 05:08 GMT
Blair to raise EU tax fears

Lionel Jospin and Tony Blair The beef row will not help summit diplomacy

UK Prime Minister Tony Blair joins other leaders at the European summit in Helsinki on Thursday where a key issue will be the row over the Europe-wide savings tax.

Britain has already given a cautious welcome to a compromise proposal floated by the European Commission and Finland, which holds the EU's rotating presidency.

But the UK still holds fears that the plan would damage the City of London and cost thousands of jobs.

Tax evasion

To help eradicate tax evasion the original directive would have forced all EU countries either to levy a minimum 20% tax on savings held in other member states, or force banks to disclose the income to those countries, to let them recover the tax.

The UK government believes this would prompt a flight of capital to other countries with less stringent rules.

The concession offered on Wednesday suggested "special arrangements" for international bonds, which do not require the UK to introduce a withholding tax on interest payments or another level of regulation.

British officials say they need to see the detail of the proposals before being satisfied that it would leave the City of London's lucrative market intact.

Other issues on the agenda for the leaders will be the enlargement of the EU, changes to the voting structure of the union and plans for a European rapid reaction defence force.

Mr Blair is also keen for the EU to step up efforts to admit Turkey and Balkan states that backed the Nato alliance during the Kosovo crisis, such as Romania.

The plans for enlargement will also prompt an examination of the structures of the organisation to ensure it can hope with the influx.

Any attempts at change to sensitive issues such as the voting system will be watched with particular care by the UK.

Beef row

Mr Blair is adamant that nothing will be agreed that runs against Britain's interests.

The summit itself starts officially on Friday, but the prime minister is also due to have unofficial talks with fellow left-of-centre leaders from across Europe.

The meeting comes at a sensitive time with the UK government furious over France's refusal to lift the ban on exports of British beef.

Mr Blair will also take the opportunity to hold private talks with the Irish Prime Minister Bertie Ahern over the latest positive developments in the Northern Ireland peace process.

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See also:
08 Dec 99 |  Business
EU tax proposals watered down
30 Nov 99 |  Business
Germany denies blaming UK for weak euro
29 Nov 99 |  Business
Anger as UK blocks EU tax
02 Dec 98 |  The Economy
Taxing Europe

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