Agenda Ecofin-Raad: Eurogroep, Lissabon, BTW en Economisch Beleid
Eurogroup Finance Ministers are due to meet in Brussels at 19:00 hours on Monday 9thFebruary. A press conference is due at the end of the Eurogroup meeting. The European Union's Council of Economics and Finance Ministers will take place on Tuesday 10thFebruary at 10:00 hours. The European Commission will be represented at the Council by Economic and Monetary Affairs Commissioner Pedro Solbes and Internal Market and Taxation Commissioner Frits Bolkestein.
Eurogroup (GT)
The Eurogroup will start with a debriefing by the Presidency on the latest G7 Finance Ministers and Central Bank Governors meeting of 6-7 February in Boca Raton, USA. Ministers will then discuss the economic situation and policy stance. Then based on an introduction by Commissioner Solbes, Ministers are expected to discuss budgetary developments in the euro area.
Finally Ministers are expected to discuss some principles that could guide preparations for ERM II participation of the new member states following accession on 1 May 2004. This discussion would built on the Athens informal Ecofin conclusions (5 April 2003) on the subject and focus on practical aspects of ERM II entry rather than euro entry perspectives for the new countries.
Council of Economics and Finance Ministers
Preparation of the European Council on 25-26 March 2004 (GT)
Ministers will discuss the Commission's Spring Report on the Lisbon Strategy (IP/04/74) in preparation of the Spring European Council on 25-26 March 2004. The Commission has called on the spring European Council to take advantage of the economic recovery and the dynamic of enlargement to give the Lisbon strategy fresh impetus. Three priorities have been identified: improving investment in networks and knowledge, strengthening competitiveness in industry and services, and promoting active ageing. After four years of implementation of the Lisbon strategy, the Union's progress is still insufficient to achieve the objectives it has set itself. Although progress has been made in a number of key fields, the implementation of the reforms by the Member States does not measure up to the task. A number of sectors are even encountering significant difficulties.
Ecofin Ministers are expected to prepare a Key Issues Paper based on the Commission's Spring Report to address to heads of state and government.
Ministers will also discuss and issue Council conclusions on the Commission's Broad Economic Policy Guidelines Implementation Report (IP/04/74) and the 2004 Annual Report by the Economic Policy Committee (EPC) on structural reforms.
Assessment of stability and convergence programmes (GT)
The Council will adopt Opinions on the stability programme updates of Greece (IP/04/112), France (IP/04/106), Ireland (IP/04/108), Italy (IP/04/107), Luxembourg (IP/04/110), the Netherlands (IP/04/109) and the convergence programme update of the United Kingdom (IP/04/111). Recommendations for such Opinions were adopted by the Commission on 28 January 2004. As part of its efforts to increase transparency and steer public debate, the Commission assessments for the updated programmes were published on the day of the Commission decision. The Commission will also publish on 10 February the detailed Commission services' (Directorate General of Economic and Financial Affairs) analysis of each programme on the following web-site:
http://europa.eu.int/comm/economy_finance/about/activities/sgp/year/year20032004_en.htm
Value Added Tax (VAT) reduced rates (JT)
Ministers are due to continue their discussions on a Commission proposal of July 2003 for simplifying the rules on reduced rates of VAT (see IP/03/1024 and MEMO/03/149). The Commission's aim is to seek a balanced approach for the whole of the European Union in this area. This requires going beyond a review of the restrictive list of goods and services to which a reduced VAT rate may be applied (Annex H to the Sixth VAT Directive) and examining the various specific derogations available to some Member States (e.g. in respect of restaurant services, housing, domestic care services and the supply of gas and electricity), with a view to removing potential distortions of competition that have given rise to numerous complaints from traders. The proposal would also provide for definitive rules concerning the VAT treatment that should be applied to labour-intensive services. The proposal would not alter the present optional nature of reduced VAT rates: no Member State would be obliged to introduce new reduced VAT rates.
Commissioner Bolkestein will acknowledge the concerns of Member States on this issue and the calls of some Member States for more subsidiarity that would allow them to decide individually on the goods and services to which reduced rates of VAT should be applied. He will report that the Commission is analysing areas where Member States could be allowed greater autonomy that at present for VAT purposes, where this does not interfere with the proper functioning of the Internal Market. The Commission will also endeavour to identify the policy issues that must be addressed if Member States are to reach agreement on a Directive in this area. Agreement is needed quickly in order to prevent a new problem arising at the end of 2005, which is the expiry date of the experimental reduced VAT rates for labour intensive services (see below). The Commission is hoping to bring a new impetus to the negotiations which should, however, continue on the basis of the Commission's proposal of July 2003.
Savings taxation (JT)
Commissioner Bolkestein will provide an up-date to Ministers concerning the negotiations on savings taxation with certain third countries. In addition, the UK and Netherlands delegations will be invited to comment on the savings taxation discussions in which they are engaged with their dependent and associated territories (the Channel Islands, the Isle of Man and the relevant territories in the Caribbean).
The Commission has been engaged in intensive negotiations with Andorra, Liechtenstein, Monaco and San Marino to reach agreement on the application by those four countries of savings tax measures "equivalent" to those agreed within the EU concerning interest income of EU residents. The Council of Ministers in June 2003 (see IP/03/787) agreed on a Directive to ensure effective taxation of interest income from cross-border investment of savings that is paid to individuals within the EU and agreed that this Directive should be implemented into Member States' national laws from 1 January 2004 and be applied from 1 January 2005. The Council also approved a draft agreement with Switzerland concerning the taxation of savings income. The Council agreed that the four elements of this agreement with Switzerland should also constitute the basis for agreements between the EU and Liechtenstein, Andorra, Monaco and San Marino. The Council must decide before 30 June 2004 whether sufficient guarantees have been met concerning savings taxation measures in the third countries and dependent and associated territories to allow the Directive to enter into force on 1 January 2005.
VAT: two-year extension of reduced rates on labour-intensive services (JT)
The Council is due to adopt without discussion a proposal (see IP/03/1693) to allow nine Member States to continue to apply for an additional two years (i.e. until 31 December 2005) the reduced rates of VAT they currently apply to specified labour-intensive services such as renovation of private dwellings, hairdressing, window-cleaning and small repairs. Directive 1999/85/EC allowed those Member States that so chose (see IP/99/1002) to apply a reduction of VAT on these services for an experimental period from 1 January 2000 to 31 December 2002 (later extended to end 2003), in order to test the impact of such a reduction in terms of job creation and of combating the black economy. In response to requests from the EU's Council of Ministers and the European Parliament, the Commission decided to propose in December 2003 the present further extension for two years because Member States have not so far agreed on the Commission's July 2003 proposal to rationalise and simplify the overall rules for reduced rates of VAT (see above).
Dock dues in the French Overseas Departments (JT)
The Council is due to adopt without discussion a Commission proposal of December 2003 to authorise the French Overseas Departments (Guyana, Guadeloupe, Martinique and Reunion) to continue until 31 ;December 2013 tax exemptions or reductions from "dock dues" taxes for certain locally made products. In accordance with the requirements of the EC Treaty, the proposed measures favouring local produce are only those strictly necessary and proportionate and are justified in the light of the handicap of the remote geographical location of these Departments.