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‘Pandora’s box’: Cameron risks fines if Britain refuses to pay EU tax bill

‘Pandora’s box’: Cameron risks fines if Britain refuses to pay EU tax bill
A failure to comply with the European Commission’s demand on the UK to contribute an extra £1.7bn ($2.66 billion) to the European Union budget could result in fines for the British government, it emerged on Monday.

Speaking in Brussels, EU Budget Commissioner Jacek Dominik warned the Commission would be prepared to fine the UK government should it fail to pay up by December 1.

Following Cameron’s refusal to pay the hefty sum, the Commissioner said “there will be a moment when the Commission will start imposing ... fines on the amounts that are due.”

Downing Street and Brussels' heated row over the EU budget has been further intensified by the Commission’s warning on Monday that changes to the method for calculating payments could jeopardize Britain’s lucrative EU rebate. At present, the rebate amounts to billions.

While Dominik has cautioned that Cameron is treading dangerous ground by refusing to pay the £1.7bn, the PM has defended his position.

The £1.7bn stems from an amendment of Britain’s Gross National Income (GNI) by the Office for National Statistics (ONS). The newly revised figures were recently agreed upon by the EU’s statistical body, Eurostat.

Cameron first learned of the EC’s demand as he arrived at last week’s EU summit on Thursday. Outraged by the request, he stressed he had no intention of paying up by December. But the European Commission said it would not renege on its demand, warning the GNI calculations are also used to discern Britain’s larger EU budget, which amounts to £2.9bn a year.

European Budget Commissioner Jacek Dominik addresses a news conference at the EU Commission headquarters in Brussels October 27, 2014. (Reuters / Francois Lenoir)

Dominik expressed surprise at Cameron’s reluctance to comply with the Commission's orders, and emphasized attempts to thwart or re-negotiate the body's request were unlikely to yield the UK government’s preferred outcome.

“Never in the past there was a situation that such a decision was changed because one of the member states have contested,” he said.

On the question of whether the EC’s demand could be reversed or withdrawn, the Commissioner said: “I am afraid it will be extremely difficult to do, especially as resources decisions and the implementation regulations concern [the] UK rebate as well.”

“So if you open this act for future negotiations you open a Pandora’s box.”

But Cameron stated flatly on Friday that Brussels “had another thing coming” if it thought it was going to get the £1.7bn (US$2.7 billion) that had been demanded by December. Commenting on the debacle, President of the European Commission and staunch EU technocrat, Jean-Claude Juncker,said the the British Prime Minister would be viewed as a coward if he didn’t get his checkbook out.

Speaking in the Houses of Parliament on Monday, Cameron reiterated his position stressing Britain would not pay the funds requested by the EC.

“We will carry on defending our national interest,” he told MPs, adding that the EU had to change and had to work to regain the trust of its members.

Cameron expressed determination to continue to push for reform of the EU, and stressed it was vital the UK government “stick to the task.”

Reflecting on the EU budget row, a Downing Street spokesman told the Guardian that Britain would not allow the rebate to be placed on the negotiation table.

The spokesman acknowledged, however, Chancellor George Osborne would discuss the matter with Germany’s minister for finance, Wolfgang Schäuble, at an OECD tax evasion summit in Berlin next week.