Major Calms Fears on Secret EU Tax the Tory Bill for a Labour Vote

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Byline: JOHN FRASER;JOHN DEANS

JOHN MAJOR was trying last night to reassure Tory MPs angered by claims that Brussels is secretly planning a single European tax and welfare system.

The allegations were fiercely denied by the EU Commission and by France and Germany - the two countries said to be pushing for the new system.

Eurocrats did admit, however, that they were carrying out a review of taxation and social security policies as part of a study of EU financial arrangements after the launch of the single European currency in 1999.

At a Cabinet session, the Premier ordered key Ministers to try to calm the party's Euro-sceptics with clear pledges that Britain will have nothing to do with any such federalist masterplan to allow Brussels to control revenue raising and welfare spending.

A community spokesman revealed that EU finance commissioner Yves-Thibault de Silguy had been told to draw up a report on new areas of economic policy which could be harmonised by countries joining the single currency.

He confirmed that income tax was one of the areas of fiscal policy being investigated.

The preparatory work was ordered in advance of possible changes to the Treaty of Rome later this year, which federalists hope will maintain the steady momentum towards a more integrated Europe.

Social security systems, excise duties and company tax could be harmonised in a similar way and there could be further harmonisation of VAT.

The spokesman said Britain would have the right to opt out of a future integrated tax system, but added that a go-it-alone policy would be pointless if the UK were to sign up to the single currency and adopt the euro.

At Westminster, leading Tories demanded Government guarantees that any plans by Brussels to hijack control of British tax and welfare would be firmly resisted. …