EU leaders to urge 'shift' in taxation to boost jobs: draft

(BRUSSELS) - European leaders will use a summit next week to urge a "shift" in taxation to make it cheaper for employers to hire workers, a draft agreement showed Wednesday.

"Member states should explore all possible ways to shift taxation away from labour," reads the text obtained by AFP that is being prepared for endorsement by leaders at Monday's summit.

A number of European states, particularly southern eurozone states, are beset by high unemployment and need to boost their labour competitiveness.

Reforms Germany undertook nearly a decade ago helped reduce labour cost for employers and are seen as one reason the for country's recent economic success.

France is currently locked in intense political debate over plans President Nicolas Sarkozy is to outline on the eve of the summit to reduce health insurance contributions paid by employers, with an increase in sales tax (VAT) to make up for the loss in funds.

With youth unemployment high in numerous European countries, EU leaders will offer to "re-programme available EU funds to create large-scale support schemes to get young people into work or training."

They also want to create what they are calling a European "skills passport," or pan-EU professional cards.

EU leaders are also being asked, according to the draft, to agree "quick progress towards greater tax coordination and prevention of harmful tax practices."

That may lead to tough negotiations as Britain, Sweden and Ireland are are against many French-German inspired moves to harmonise certain taxes.

France has already announced it will unilaterally introduce a tax on financial transactions, for example, even before other eurozone nations follow suit.