Select Committee on European Communities Seventeenth Report


44.  MUTUAL ASSISTANCE FOR THE RECOVERY OF CLAIMS (9877/98) and (8089/99)

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

  I attach a copy of a letter which I sent on 12 November last year to Patricia Hewitt about the proposal on mutual assistance for the recovery of claims. I addressed myself to her because the Explanatory Memorandum accompanying the document had been signed by her predecessor, but I understand from your officials that responsibility for this matter has now passed to you. Despite frequent reminders, however, I have still received no reply to the letter.

  It follows that the document remains uncleared. But it also follows that Sub-Committee A does not have the benefit of the Government's thinking on this matter, which you will appreciate is highly relevant to its present enquiry into taxes in the European Union. May I therefore ask you for an early reply, please?

4 May 1999

Annex

Letter from Lord Tordoff, Chairman of the Committee, to Patricia Hewitt MP, Economic Secretary to the Treasury

  Sub-Committee A (Economic and Financial Affairs, Trade and External Relations) considered this proposal for the first time at its meeting on 10 November. It was content with the substance of the proposal, but noted your concern that the Treaty base for it was Article 100a, which would make it subject to co-decision with the European Parliament and qualified majority voting in the Council.

  The Sub-Committee shared your view that all substantive EC tax matters should remain subject to unanimity, but wondered whether the same was necesarily true of administrative arrangements relating to tax. I should be grateful if you could let me have your further views on this question. In the meanwhile, the Sub-Committee wishes to maintain the scrutiny reserve.

12 November 1998

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

  Thank you for your letters of 12 November and 4 May, concerning the scrutiny of these documents. I am very sorry for the oversight in not replying to your letter sooner. We have taken steps to improve co-ordination of Treasury, Customs, and Inland Revenue leads for which both Patricia Hewitt and I have responsibility.

  I am pleased to learn that your Committee supports the Government's view that all substantive EC tax matters should remain subject to unanimity. The Government is determined to maintain unanimity as the basis for EC decision-making on tax issues.

  This particular proposal is concerned with extending and enhancing the current arrangements for mutual assistance between Member States for the recovery of tax and similar debts. Although these are administrative arrangements, they would have a direct impact on taxpayers as well as affecting the level of tax recovered within the community and thus the revenues of Member States. It is clearly unacceptable that Qualified Majority Voting in the Council (QMV) should apply in such circumstances. This is particularly important when the proposal includes measures such as the requirement that contested claims be recovered.

  We accept that QMV can apply to provision that are not concerned with the harmonisation or application of the tax, such as the consolidation of existing administrative co-operation arrangements relating to administrative practice (an example of this was our agreement to the Fiscalis decision which was no more than a vehicle for Community level funding for the programme).

  However, substantive changes in administrative arrangements relating to tax can affect the burdens and constraints placed upon UK businesses or have a revenue impact on the Exchequer. If such decisions were to be the subject of QMV decision-making, the UK could be outvoted and there would be a serious risk that such decisions could prove to be damaging to the UK's interests. Hence the Government believes that unanimity must be retained as the basis of decision making in these areas.

7 June 1999

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

  Thank you for your letter of 7 June, replying to mine of 12 November 1998. I am glad to note that you have put in place arrangements to prevent such long delays in future.

  On the substance of your letter, we reserve judgment for the present. But since we note that an amended version of the proposal is coming forward, we are now clearing this document. However, if subsequent drafts are to be on the same legal base, and you are intending to maintain your position, we would ask you to provide more detail in your next Explanatory Memorandum of the areas in the proposal where you consider that QMV would be inappropriate, with your reasons.

22 June 1999

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

  At its meeting on 29 June, Sub-Committee A considered the amended proposal for this Directive, on the basis of your Explanatory Memorandum of 18 June. This EM had, of course, crossed in the system with my letter of 22 June to you, asking that in it you should provide more detail of the areas in the proposal where you considered QMV would be inappropriate, with your reasons.

  We should be grateful if you could provide this information urgently, as we wish to include our views on this proposal in the Report which we are preparing on taxes in the EU.

29 June 1999

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

  Thank you for your letters of 22 and 29 June, the first of which crossed with my Explanatory Memorandum of 18 June.

  You ask about the areas in the amended proposal on mutual assistance for the recovery of tax debts where I consider QMV would be inappropriate. I would like to be as helpful to the Committee as possible but I am not sure what you have in mind, as the proposal is a single package which will need to be voted on as a whole.

  It is clear from the Treaty establishing the European Community that substantive tax matters can be adopted only by unanimous agreement of the Member States. And in my letter of 7 June I explained why the Government considers it vital that this remains the case.

  We consider this to be substantially a tax proposal. The measures it contains would not merely consolidate existing arrangements for cross-border collection of tax debts but would change them and extend them to other taxes. Given that what we have on the table is a single proposals concerned largely with tax, we consider the legal base which the Commission has put forward—a legal base which cannot apply to fiscal provisions—to be inappropriate for the proposal as a whole. That view is shared by no fewer than 12 other Member States.


 
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