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Slovak ministers pan French EU proposal to dock low-tax states

Slovakia's ministers of finance and economy criticised a proposal by French Finance Minister Nicholas Sarkozy that gives less aid to new EU members who have corporate taxes below the EU average, news wire TASR reports.

"We want a Europe that is competitive. It seems that Minister Sarkozy wants to punish countries implementing the necessary reforms beneficial to the entire EU," Slovak Finance Minister Ivan Mikloš told reporters.

Sarkozy’s proposal would prevent new members from using special funds to help underdeveloped regions if their corporate taxes fall below the EU average. The Slovak ministers are confident Sarkozy’s motion does not have the support of current EU statutes.

"This step is extraordinarily harmful to the economic interests of the EU itself, damages competition, and worsens the business environment. If this is the way to meet the Lisbon strategy goals (of making Europe's economy the world's most competitive), forget it," said Economy Minister Pavol Rusko.

Slovakia leads efforts among new EU members to reduce taxes. Its reforms are designed to enhance economic growth and reduce the budget deficit so that Slovakia can adopt the euro by 2009. Slovakia instated a 19-percent flat corporate and income tax rate in 2004, well below the EU average.

Sarkozy's proposal involves only new member states. Ireland, Great Britain, Portugal, Spain, and Greece have a tax burden lower than the EU average, but they are eligible to draw money from EU structural funds.

The European Commission said it did not support the French proposal and rejected any links between tax rates and structural funds.

Compiled by Martina Jurinová from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

From 2004 to 2006, Slovakia is entitled to some €1.5 billion (SK61 billion) in aid that can be directed into agriculture, rural development, the environment, and infrastructure development.

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