Select Committee on European Union Forty-Ninth Report


OPERATION OF TAXATION SYSTEMS IN THE INTERNAL MARKET (FISCALIS 2007 PROGRAMME): 55201

Letter from the Minister, Dawn Primarolo to the Chairman

  1.  I write to advise you of recent developments in respect of the above proposal which has been put forward under Article 95 (QMV) and so is subject to Co-Decision procedure between the Council and the European Parliament.

  2.  Annexed is a copy of Document 9845/02 of 25 June 2002 which reports the outcome of the European Parliament's first reading of the proposal. As you can see, the Parliament suggested seven (7) amendments to the text. At a Tax Questions Working Group meeting on 27 June, the Council accepted just one of the amendments, the fifth, about the submission of a report to the European Parliament. This outcome will now be reported back to the Parliament for its second Reading.

  3.  At the same Tax Questions Working Group meeting the Spanish Presidency asked Member States whether they could accept a revised compromise text which maintained Article 95 as the legal base and extended the scope of the FISCALIS Programme to direct tax and taxes on insurance premiums. You will be aware from our Explanatory Memorandum that although the government recognises and values the important role which administrative co-operation can play in countering fraud, particularly with regard to VAT, we see no justification or need to extend the FISCALIS programme to direct taxes or taxes on insurance premiums. There is no evidence that Member States will derive any real benefit from such an extension and may incur additional costs. You recognised and supported the Government's view on this issue.

  4.  During the Council negotiations the UK vigorously argued this point, but we could not persuade most other Member States that the extension of the programme to direct taxes and insurance premium taxes was inappropriate. However, our opposition ensured three fundamental changes in the compromise text:

    —  activities are restricted only to raising awareness of Community law rather than Community direct tax policies;

    —  the UK (and other member States) need not participate in any direct tax related activities; and

    —  there is an explicit provision in relation to the sensitive area of exchange of officials, that participating countries may restrict the scope of exchanges to VAT and/or excise duty officials.

  These are important changes because they ensure that the UK can maintain clear control over these sensitive areas of tax policy.

  5.  In the circumstances, and particularly in view of the UK's overall support of the need for strengthened EC administrative co-operation arrangements, it would be inappropriate for the UK to vote against such a measure. I have therefore given instructions for the UK to "abstain" from any vote in Council on the current text as it proceeds through the Co-Decision process with the European Parliament.

  6.  I shall of course continue to update you at each key stage of the Co-Decision process.

10 July 2002

Letter from the Minister, Dawn Primarolo to the Chairman

  I write to advise you of the outcome of discussions in respect of the above proposal which has been put forward under Article 95 (QMV) and so is subject to Co-Decision procedure between the Council and the European Parliament. An Explanatory Memorandum (5520/02) was submitted to the Committee on 28 February 2002 and considered by the Committee on 13 March.

  The Council reached a Common Position on the revised text on 19 July and, as I advised would be the case when I wrote to you on 10 July, the UK abstained in the vote. The proposal was then returned to the EP for its second reading. At its second reading the EP accepted the Council Common Position without proposing any further amendments to the text. As a result the Decision will shortly be formally adopted ready for the programme to start at the beginning of 2003.

  I hope this update will allow the Committee to complete its consideration of this proposal.

12 November 2002


 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2003