October 3, 2018 / 8:57 PM / 2 months ago

Le Maire calls for German backing on digital tax, euro zone budget

BERLIN, Oct 3 (Reuters) - Failing to take decisive steps towards harmonising corporate tax rates and ensuring foreign internet giants pay more tax will further fuel populism in the European Union, France's Finance Minister Bruno Le Maire said in a German newspaper interview.

In an interview with the Sueddeutsche Zeitung, Le Maire urged Germany to support France's efforts to introduce a Europe-wide digital tax.

He repeated his call, unpopular in German Chancellor Angela Merkel's conservative bloc, for a central euro zone budget, warning that the EU single currency would not survive without one in the long term.

His comments, made to the paper after a meeting of euro zone finance ministers in Luxembourg and published on Wednesday evening, come as Berlin's unwieldy government coalition struggles to revive its policy agenda after weeks of rowing over everything from the retrofitting of dirty diesel cars to migration and the threat of right-wing extremism.

"The domestic political situation cannot become an excuse to delay urgent European policy decisions," he was quoted as saying. "Not taking decisions now feeds populism. It is better to act fast and fine-tune later."

European citizens "will not understand if digital companies like Google or Amazon or Chinese internet companies pay less than all other companies," he said, urging Germany to cast aside its caution in dealing with the U.S. and its internet giants.

"Who are we afraid of? The U.S.?" he asked. "It should be clear by now that Donald Trump only respects those who show strength and resolution," he said, adding that the size of the EU market gives Brussels leverage over Amazon and Facebook.

Calls for a euro zone budget have been greeted with great scepticism in traditionally parsimonious Germany, but Le Maire said possible future economic crises would endanger the single currency without one.

"There will be a euro zone budget or else there will one day no longer be a euro zone," he said.

He added that France's budget deficit, which came in below the EU's ceiling of 3 percent of economic output in 2017 for the first time in a decade, would come in below the target in 2018 and 2019 as well. (Reporting by Thomas Escritt; Editing by Hugh Lawson)

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