September 26, 2002
US endangers Brown savings tax plan
By Edward Alden, Francesco Guerrera and Amity Shlaes
A UK-inspired plan to agree European Union-wide rules on the taxation of non-residents' savings could be derailed by a US refusal to co-operate. Glenn Hubbard, chairman of the White House
Council of Economic Advisers, told a meeting of conservative political groups that Washington would not agree to European requests for broad sharing of information on savings accounts held in the US by foreigners. "We are not
for the European savings initiative," he said. The US position is a blow for Gordon Brown, the chancellor, who fought a tough battle to get his EU counterparts to agree to the current proposal, which is a key part of plans for
a single financial market. Mr Brown's staunch opposition to a 1998 plan for an EU-wide "withholding tax" on savings triggered a series of disputes with other EU governments as well as the European Commission. The
row, which became emblematic of Britain's desire not to cede any of its powers on taxation to Brussels, was resolved in 2000, when the withholding tax proposal was scrapped in favour of a system of exchange of information between
governments. However, that was dependent on the European Commission persuading a number of non-EU countries, such as the US and Switzerland, to adopt similar measures. Until now, the Swiss had been the main stumbling block to
finalising a deal. Now Mr Hubbard's comments, which reflect a position hammered out last month by senior US officials from all the leading US economic agencies, have cast doubt over whether it can go ahead. US agreement to
participate is vital. Under the plan countries would automatically exchange information on the interest paid to non-resident holders of savings accounts, enabling each government to tax the savings of its own citizens and to
clamp down on tax evasion. Commission officials had said that talks with the US Treasury, which has responsibility for tax matters, had been proceeding well, but Mr Hubbard's comments showed that the White House was taking a
tougher line. The US Treasury still says no final decision has been made. Additional reporting by Amity Shlaes www.ft.com/globaleconomy
Contact Information: Center for |
