The proposal is focused on raising funds for tax-hungry governments yet again leaving the private economy as the poor cousin of Europe. For Irealand, it will also lead to a dramatic decline in foreign and domestic activity.

ALBERT EINSTEIN once said that "two things are infinite: the universe and human stupidity; and I'm not sure about the universe". Alas, Einstein lived in the world before Europe had its Commission. Indeed, the past experience with economicallyilliterate directives that the Commission has a penchant for producing suggests that the vastness of Brussels' stupidity can be only matched by its infinite tenacity to see anything proposed passed into law.

This Wednesday, the EU Tax Commissioner Laszlo Kovacs presented a report on his proposal to harmonise corporate taxation by 2011 that serves well to illustrate both of these points.

This column has seen the unpublished report setting up a plan to legislate a common corporate tax base "accompanied with consolidation" of various tax bases currently found in the member states.

The report effectively commits Mr Kovacs to table a full Common Consolidated Corporate Tax Base (CCCTB) proposal that will feature a singular supra-national accounting procedure for establishing companies' taxable income. In effect, Kovacs' proposal, stopping just short of creating a single corporate tax regime across the EU, is harmonising tax regulations across the member states, various sectors and types of firms.

The unpublished report gives a summary of benefits that, commissioner Kovacs believes, will be delivered under the singular tax base approach.

These include hypothetical cost savings from reducing the administrative burden of compliance and regulatory uncertainty. According to the report, these effects can stimulate foreign and crossborder investment in the EU, making "a significant contribution to the success of the internal market". All of these benefits are, however, purely theoretical pending the impact assessment.

The impact assessment is a study of potential effects of the new regulations that is required in order to table any new executive proposals.

Kovacs, whose Commission pioneered this requirement in an earlier attempt to reduce its own excessive legislative activism, knows this. In his presentation to the Commission, Kovacs spends pages paying lip service to the assessment.

"A number of alternative policy options will be identified and their respectivef impacts assessed in depth, in qualitative and where possible quantitative terms." It is indeed worrying that qualitative assessment . . .

something that can mean virtually anything under the sun . . . is explicitly considered by Kovacs to be on par with objective quantitative analysis.

Even more concerning is Kovacs' promise that the Commission will use experts' advice only on an ad hoc basis . . .

effectively allowing the Commission to pick-andchoose the experts' recommendations to suit its own goals.

"Any step towards the CCCTB should have a fair impact on the Member States' public finances, possibly leading to an overall increase of revenues" says Kovacs.

Clearly, the CCCTB will be primarily focused on raising added state revenue, with both, the interests of the private economy taking on the role of the poor cousin at the tax-andspend gathering of Europe's tax-hungry governments.

Kovacs almost admits this much, when he claims that CCCTB should "generallyf broaden the corporate tax base" . . . a favorite EUphemism for increasing the tax burden.

The proposed rules will apply to both small- and medium-sized enterprises, and to larger corporations. Kovacs leaves no doubt that the CCCTB will be extended to cover the financial services sectors.

The proposal envisions "a coordinated administrative system allowing a single consolidated assessment and a single appeals process".

This will create an entirely new EU-wide bureaucracy, as well as circumvent the national systems of jurisprudence.

Kovacs is deadly serious in this, saying "this would require provision for either dividing jurisdiction between national systems or conferring jurisdiction to Community courts."

Despite the rhetoric about the need for an impact assessment, Kovacs concludes by stating without a shade of a doubt that "the need for CCCTB remains".

This contradicts his commitment to review, in an unbiased manner, other alternatives to CCCTB, including the status quo of national sovereignty in the issues of taxation. In other words, Kovacs appears to have made up his mind well in advance of due process and outside the rules set out by the Commission itself.

From the Irish perspective, one must recognize the simple fact that any harmonization of taxes across the EU will inevitably lead to a dramatic decline in foreign and domestic investment activity in this country. In response to Kovacs' proposals, Eoin Ryan MEP has rightly suggested that the Commission's push for CCCTB will represent a "vigorous and determined assault on Ireland's low corporate tax rate".

By pitting tax-hungry EU states against the interest of growth-oriented states such as Ireland, the UK and the new member states, Mr Kovacs is certainly doing disservice to Europe . . . economically, socially and politically.

Dr Constantin Gurdgiev is an economist and editor of Business & Finance magazine