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Mar 11, 2009, 13:41 GMT

EU's nappy fight gets dirty as Brussels eyes VAT slackers

Brussels - A row over VAT rates on nappies looked set to get dirty on Wednesday as the European Union's executive said it would have to discipline five countries for levying too little tax on disposable diapers. 'Sooner or later, the European Commission has to go ahead with those infringement (proceedings) and ask the (European) court to give an interpretation,' commission taxation spokeswoman Maria Assimakopoulou told journalists in Brussels. The five 'refuseniks' - the Czech Republic, Hungary, Malta, Poland and Portugal - argue that they need to keep the price of nappies low to encourage parents to have more children to reverse their declining populations. But on Tuesday EU finance ministers decided to they could not approve VAT rates of below the EU minimum of 15 per cent on nappies. The quintet have been in the firing line since 2006 for their refusal to bring VAT rates on nappies up to the EU minimum level. In its role as enforcer of the EU's rules, the commission launched legal action to bring them into line, but then froze it while member states debated a wider reform of VAT rules. Tuesday's refusal by ministers to add nappies to a package of goods and services deemed as eligible for reduced VAT means that the Brussels-based body will now re-open those proceedings.

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