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Married Couples Tax Allowances

Mr. Swayne: To ask the Chancellor of the Exchequer what estimate he has made of the number of new pensioner couples who will be affected by the withdrawal of married tax allowances. [99085]

Dawn Primarolo [holding answer 29 November 1999]: Today's pensioner couples will keep the married couples allowance. Any couple where at least one spouse is 65 or over before 6 April 2000 will continue to be able to claim the allowance. In addition, any new pensioner

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couples--single people aged 65 or over before 6 April 2000--who subsequently marry will be able to start claiming the allowance after they marry.

EU Economic and Finance Council

Mrs. Lawrence: To ask the Chancellor of the Exchequer what was the outcome of the ECOFIN Council held in Brussels on 29 November; and if he will make a statement. [101478]

Miss Melanie Johnson: The Chancellor of the Exchequer attended the Economics and Finance Council of Ministers. The Paymaster General; in her capacity of chair of the Code of Conduct Group, was also present.

The Council adopted a directive on electronic money.

There was a discussion of the so-called "tax package" (code of conduct on business taxation, taxation of savings, and elimination of withholding taxes on cross-border interest and royalty payments between companies). The United Kingdom position, set out in its paper on international bonds presented by the Chancellor of the Exchequer to the informal meeting of the Council in September, remains unchanged. A draft report from the Council to the European Council was agreed.

Following discussion, the Presidency concluded that Greece no longer had an excessive deficit. The formal decision would go to a future Council as an 'A' point.

The Council finalised their report on Economic Policy Co-ordination, which will go to next week's European Council in Helsinki.

The President of the European Court of Auditors gave an oral report on the Court's Annual Report published earlier this month outlining the priorities for reform.

The Council discussed the progress of the Financial Services Action Plan, and draft Council conclusions, submitted by the Presidency, were agreed without discussion.

The Commission gave a report on Financial Management and stated that improving it was one of their top priorities.

Diesel/Water Emulsion Fuels

Mrs. Lawrence: To ask the Chancellor of the Exchequer how he proposes to treate, for excise duty purposes, the water content of diesel/water emulsion fuels. [101595]

Mr. Timms: Both EU and UK law make any liquid that is added to fuel liable to duty, even water. We do not think that is fair. We shall therefore be applying to the European Commission for a derogation enabling us to propose an amendment to the law in the next Finance Bill.

EU Commission Draft Own Resources Directive

Mr. Bercow: To ask the Chancellor of the Exchequer what measures are planned for an explanation of Commission Own Resources for entry into force in 2002 under the Berlin Conclusions; and if such will lead to an increase in the Communities budget. [101034]

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Miss Melanie Johnson: An explanatory memorandum on the Commission's Draft Own Resources Decision that enacts the agreement reached in Berlin was sent to the European Scrutiny Committees on 28 July 1999. The new Draft Decision maintains the Own Resources ceiling.

Cologne European Council

Mr. Bercow: To ask the Chancellor of the Exchequer if he will make a statement on the future role of the European central bank in employment policy, pursuant to the Cologne Summit, with particular reference to the macro-economic dialogue. [101028]

Miss Melanie Johnson: It is recognised in the UK and across the EU that long-term, sustainable job creation requires a macro-economic climate of stability and steady growth. The addition to the European Employment Pact at the Cologne European Council of a macro-economic dialogue is a recognition of this fact. As Annexe I of the Cologne Conclusions makes clear, the dialogue is intended to be

Mr. Bercow: To ask the Chancellor of the Exchequer if he will define the combat of harmful tax competition as referred to in section 22 of the Cologne Council Conclusions; and what measures are currently under discussion at EU level on this issue. [101031]

Dawn Primarolo: The conclusions of the ECOFIN Council meeting on 1 December 1997 concerning taxation policy state that there is a

There have been regular discussions in the Council of the proposed "tax package".

Mr. Bercow: To ask the Chancellor of the Exchequer if the UK will be subject to the provisions of section 19 of the Cologne Council Conclusions on (a) increased policy co-ordination, (b) dialogue between the social partners, (c) dialogue with the European Central Bank and (d) development of the European Employment Pact. [101029]

Miss Melanie Johnson: Section 19 of the Cologne Conclusions refers to the Council's adoption of Broad Economic Policy Guidelines of member states and the Community. The UK Government support the use of non-binding Broad Economic Policy Guidelines as a means of developing a co-ordinated macro-economic policy mix. They welcome the involvement of a variety of relevant policy actors--including both sides of industry and the ECB--in this process through the macro- economic dialogue, agreed at the Cologne Council as a third prong in the European Employment Pact.

Mr. Bercow: To ask the Chancellor of the Exchequer what measures are understood by (a) limitation of the burden imposed on low-skilled and low-paid workers and

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(b) characterising retirement provision by responsibility towards future generations, in the report to the European Council at the Cologne Summit on the European Employment Pact. [101026]

Miss Melanie Johnson: The European Employment Pact recognises the importance of improving the incentives for people to work and ensuring that employment policies are sustainable. An appropriate incentive structure is one that reduces the burdens of tax on low-paid workers and ensures that they are better off in work than on benefits. The Government have implemented a number of reform measures to put this into place. The Working Families Tax Credit, reforms to National Insurance Contributions, the new 10p rate of income tax and the cut in the basic rate to 22p all reduce the burden of tax on labour, and help to ensure work pays for everyone. A long-term approach to fiscal sustainability must include a strategy to cope with demographic change, including population aging. To this end, member states--the UK included--have an interest in pursuing fiscal and budgetary policies which respect the objectives of the Stability and Growth Pact.

Mr. Bercow: To ask the Chancellor of the Exchequer if he will make a statement on, and clarify the intent of, section 24 of the Cologne Presidency Conclusions. [101032]

Miss Melanie Johnson: Section 24 of the Presidency Conclusions from the Cologne European Council relates to a proposal enabling member states to introduce a lower VAT rate on labour-intensive services for a three-year trial period beginning in January 2000. With a view to making the taxation system more employment friendly, member states are invited, without obligation, to examine this proposal.

Mr. Bercow: To ask the Chancellor of the Exchequer if he will make a statement on the implementation of appropriate wage development, as called for in section 20 of the Cologne Presidency Conclusions; which sectors of employment are referred to; what his policy is thereto; and what his Department defines as appropriate. [101030]

Miss Melanie Johnson: The maintenance of "appropriate wage development", in the context of section 20 of the Cologne European Council conclusions is an essential factor in achieving macro-economic stability, in particular in keeping control of inflation. As section 20 makes clear, this is particularly imperative for the Euro 11 (the group of countries adopting the Euro in the first wave). The Cologne Conclusions do not bind the Government to specific policy measures on wage developments; however, the Government believe it is important that wage developments across all sectors reflect productivity and labour market conditions and accord with the aim of maintaining low inflation and a stable macro-economic climate.

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