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UK's Brown accepts EU rebate cut - with view on VAT gains

brussels bureau

UK's Brown accepts EU rebate cut - with view on VAT gains


Britain’s finance minister Gordon Brown has backed down in a lengthy row over the European Union budget, EU sources say. The man likely to become the next prime minister this summer has accepted a cut in the controversial UK rebate, according to EU diplomats.

EU ambassadors won a hard-fought agreement under which Britain will pay its full share towards rebates for other big net contributors to the bloc’s budget.

Prime Minister Tony Blair took a pro-European approach in 2005 when he accepted a
10.5 billion euro cut in the rebate won by Prime Minister Margaret Thatcher in 1984.

Several weeks after Blair took this political risk on the 2007-2013 budget deal – struck under Britain’s EU presidency – on Brown’s instructions, London blocked the formal adoption.

Diplomats said that in return for approving it now, Britain will be allowed to use a new mechanism which France had blocked, to fight costly Value Added Tax fraud in the consumer electronics sector;

This fraud is estimated to cost the UK treasury far more than the amount at stake in the budget dispute.

The deal is due for formal adoption later this month, if, like all matters of taxation, there is unanimous agreement among the member states.

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