Hopes that a British initiative, due to be presented to an EU finance ministers' meeting here this weekend, would chart a way through bitter disagreements about a Europewide minimum withholding tax on savings faded last night.
Diplomatic sources suggest that a 27-page British paper, drawn up by the Chancellor, Mr Gordon Brown, and circulated at the last moment before the meeting convened, makes it clear that the British demand for the exemption of eurobonds from the tax is still non-negotiable.
Other member-states are reluctant to exempt the eurobond market because it would create a distortion in the treatment of savings and would be difficult to administer.
To prevent massive tax evasion through the use of non-resident accounts, primarily in Luxembourg, finance ministers have been struggling to reach an agreement that would offer member-states either the alternative of imposing a 20 per cent minimum tax themselves, or a requirement to report such savings accounts to the tax authorities of the non-resident.
The Minister for Finance, Mr McCreevy, said that although he had not yet had time to study the British paper, it was clear it would not break the logjam. While Ireland has for some time supported the principle of a Europe-wide minimum withholding tax, he said, the detail was enormously complex.
The Finnish Presidency of the EU had hoped the issue could be resolved for the December summit and has now said it will call another meeting of finance ministers in November to see if matters can be taken forward.
The Finnish Finance Minister, Mr Sauli Niinisto, refused to be drawn on the detail of the British paper but his body language suggested that its late arrival was not his only problem.
Today ministers resume their discussions on the state of their economies as the euro-11 and then are joined by the non-euro ministers for the full informal meeting. As well as tax co-ordination, other issues to be discussed include the need to co-ordinate the issuing of public debt across the euro zone and decisions about the practicalities of the introduction of euro banknotes and coins in 2002.
