April 29, 2007 9:36AM

European Commission Continues Attack on Swiss Tax System

A Swiss newspaper reports on the latest skirmish in the Brussels‐​led effort to hinder
Switzerland’s ability to maintain pro‐​growth tax policy. The European Commission argues that low tax rates are somehow akin to a subsidy, while also arguing that a free‐​trade agreement between Switzerland and the European Union somehow obliges
Switzerland to modify its tax laws. But the most revealing part of the story is that both the socialists and the so‐​called conservatives in the European Parliament are in favor of this attack on tax competition:

The European Union has once again taken Switzerland to task for its policy on corporate taxes, which it claims violates a free trade accord with Bern. …Earlier this week senior EU diplomats approved a mandate for talks between the Commission and Switzerland. Brussels argues that the practice of some cantons of partially exempting profits generated abroad from local company taxes is in breach of the 1972 agreement between Bern and Brussels. However, Switzerland which is not a member of the EU, has consistently said that corporate tax and the tax policies of the cantons were never parts of the free trade agreement. …The two main political groups in Strasbourg: the Conservatives and Social Democrats, supported the European Commission in its position against Bern.