Finland called on Thursday for more tax coordination among EU member states, opening debate in a field usually reserved for national competence.

"What we could do next is to explore new avenues to coordinate economic policies, when the next upswing begins. A good way is to increase cooperation in the field of taxation," Finnish Prime Minister Matti Vanhanen said before a summit with his EU counterparts in Brussels Thursday.

Vanhanen said the EU needs to prepare for the post-crisis period although the economic crisis is not over, urging governments to rein in their soaring deficits.

"The outcome of the crisis is that we must be able to reduce our public debt ratio," he said. "This is the precondition for us to meet the challenge of an aging population."

In the effort to reduce deficits, Vanhanen said tax coordination would benefit everyone by increasing government revenues and helping fiscal consolidation, while unrestrained tax competition between member states would harm economic growth.

Tax has been one of the most sensitive issues in the EU and any decision in this field needs unanimous approval from member states.

Vanhanen said that he is not asking for tax harmonization, but similar coordination measures in the area of taxation as EU countries did last autumn with banking policy and fiscal policy.

Ahead of the EU summit, European Commission President Jose Manuel Barroso also called on EU leaders to prepare exit strategies, focusing on sustainable public finances, for when recovery takes hold.

Source: Xinhua