Select Committee on European Communities Seventeenth Report


13.  VALUE ADDED TAX (13409/98)

Letter from Lord Tordoff, Chairman of the Committee, to Mrs Barbara Roche MP, Financial Secretary to the Treasury

  At its meeting on 19 January, Sub-Committee A (Economic and Financial Affairs, Trade and External Relations) considered your predecessor's Explanatory Memorandum of 18 December 1998 on this document. It agreed that the proposed continuation of the minimum rate of 15 per cent for VAT did not pose a problem. But it shared the Government's doubts about the proposal to introduce for the first time a maximum rate. Since it is obviously necessary for the minimum rate element of the programme to be agreed as soon as possible, we presume that you will be seeking agreement that the two elements should be separated. We should be glad to know whether you expect to gain support from other Member States for this position, and if not, how you intend to proceed. Until we receive your reply, we are holding this document under scrutiny.

20 January 1999

Letter from Dawn Primarolo, Paymaster General, HM Treasury, to Lord Tordoff, Chairman of the Committee

  Thank you for your letter of 20 January 1999 about the Explanatory Memorandum on the Commission's proposals on the level of the standard rate of VAT.

  You will be interested to hear that the first official level discussion of the proposal took place in Brussels on Friday 22 January at a meeting of the Financial Questions Group. I am pleased to be able to tell you that Sweden, Denmark and the Netherlands, as well as the UK, expressed their opposition to the introduction of a maximum rate of VAT of 25 per cent. The German Presidency, with the support of the other Member States, therefore decided that this element of the Commission's proposal should be dropped and that there should only be a minimum rate of VAT of 15 per cent. The Member States also agreed that this minimum rate should remain in force for a two year period (ie until 31 December 2000) instead of the one year originally proposed. In an amended form, we are now hoping that the proposal will be prepared for approval as an "A" point at an early Council meeting, subject to Parliamentary Scrutiny reserves.

29 January 1999

Letter from Lord Tordoff, Chairman of the Committee, to Dawn Primarolo MP, Paymaster General, HM Treasury

  Thank you for your letter of 29 January, telling us that at official discussions it had been agreed that the maximum rate element of the Commission's proposal should be dropped. When Sub-Committee A considered your letter it decided that the document in question should nevertheless be held under scrutiny until the expected new proposal goes forward.

23 February 1999

Letter from Lord Tordoff, Chairman of the Committee, to Dawn Primarolo MP, Paymaster General, HM Treasury

  In my letter of 23 February, I told you that Sub-Committee A had decided that this document should be held under scrutiny until the expected amended proposal, deleting the standard maximum rate of tax, had gone forward. With your Supplementary Explanatory Memorandum of 22 April you have sent us the text of a Presidency compromise proposal which meets this point. Accordingly, at its meeting on 4 May, Sub-Committee A agreed to clear the original document from scrutiny on condition that the proposal is amended in line with the Presidency compromise text.

5 May 1999


 
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