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5/28/07

IHT/Bloomberg News: Tax-cut war widens in Europe - by Simon Kennedy

For the complete report in the International Herald Tribune click on this link

Tax-cut war widens in Europe - by Simon Kennedy

A tax-cut war is spreading across Europe as leaders of the Continent's biggest economies give up criticizing smaller neighbors for cutting business-tax rates and decide to join them instead. The move toward lower levies on corporate profits in Spain, Germany, France and Britain is aimed at attracting companies and reinforcing the strongest economic expansion in six years. It comes after Ireland and new European Union members from Eastern Europe succeeded in attracting investment, and irking their larger rivals, with tax rates of less than 20 percent, among the world's lowest.

"The gloves are off," said Erik Nielsen, chief European economist with Goldman Sachs in London. "Bigger countries are now competing on taxes. This is very much something that will determine how much and where companies want to invest."

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