EU member states must ditch plans to harmonise their taxes as part of a new constitution or risk remaining a rigid economic bloc unable to compete with Asia and the United States, Britain's Chancellor of the Exchequer, Gordon Brown, warned.

A new attack on European Union pressure to harmonise corporate taxation is due from chancellor Gordon Brown at today's EU Finance Ministers' Council meeting.

Gordon Brown stepped up his anti-European rhetoric by insisting Britain would resist EU proposals for harmonised corporate tax and VAT rates.

A damaging rift has opened up at the top of the Labour government between chancellor Gordon Brown and prime minister Tony Blair over European tax harmonisation and membership of the party's ruling National Executive.

European companies believe that tax harmonisation across the European Union will benefit them more than any other measure imposed on the single market.

A historic compromise agreement has been reached within the European Union on rules governing the taxation of savings invested abroad.

Pressure for the UK to move towards tax harmonisation with the rest of Europe has been rejected out of hand by the country's finance directors.

The Institute of Directors says rather than introduce European Union-wide tax harmonisation, 'European treaties should be amended to respect the rights of member states to protect their tax bases'.

European Union competition commissioner Mario Monti is to ask his colleagues on the European Commission to ban two special tax regimes - in Netherlands and Belgium - while allowing a threatened taxation system in Ireland to continue.

Gibraltar looks set to lose its tax haven status today as EU competition commissioner, Mario Monti, asks it to phase out its Exempt Company regime by 2005, reports the Associated Press.