12. CO-OPERATION IN THE
FIELD OF TAXATION
| (23182)
5520/02
COM(02) 10
| Commission Communication on the desirability of continuing a programme of action to ameliorate the taxation systems of the internal market;
Draft Decision by the Council and the European Parliament for a Community programme to improve the operation of the taxation system in the internal market (Fiscalis 2007 Programme).
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| Legal base: | Article 95 EC; co-decision; qualified majority voting
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| Department: | HM Customs and Excise and Inland Revenue
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| Basis of consideration: | Minister's letter of 12 November 2002
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| Previous Committee Report: | HC 152-xxii (2001-02), paragraph 11 (20 March 2002) and HC 152-xxxviii (2001-02), paragraph 3 (16 October 2002)
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| To be discussed in Council: | Not known
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| Committee's assessment: | Legally and politically important
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| Committee's decision: | Cleared
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Background
12.1
The existing Fiscalis programme was established in 1998 for five
years with the objectives of improving co-operation between Member
States and candidate countries in the field of indirect taxation,
disseminating best practice and helping officials to reach a high
level of knowledge of EU indirect tax law. The proposal is for
the creation of a new five-year programme for administrative co-operation
on tax (Fiscalis 2007).
12.2
We first considered the document on 20 March 2002. The Paymaster
General (Dawn Primarolo) told us then that the Government recognised
the importance of administrative co-operation in countering fraud
and generally supported the Fiscalis programme. However, she
added that the Government disagreed with the proposed extensions
to direct tax and insurance premium taxes (IPT). Like the Minister
we generally welcomed the proposal but were concerned at the possibility
that Fiscalis could be extended to direct tax and IPT. We left
the document uncleared and asked the Minister to keep us informed
of developments.
12.3
We considered the document again on 16 October 2002. The Minister
told us that the Government had maintained vigorously its opposition
to the inclusion of direct tax and IPT. However the Government
had received little support. A compromise text still covered
these taxes. But the compromise text contained three fundamental
changes:
— activities are restricted to raising awareness of
Community law;
— the UK (and other Member States) need not participate
in any activities related to direct taxes; and
— there is an explicit provision that participating
countries may restrict the scope of exchanges to VAT and/or excise
duty officials.
12.4
The Minister assured us that "These are important changes
because they ensure that the UK can maintain clear control over
these sensitive areas of tax policy."
12.5
We noted the Minister's assurance that the amended proposal, although
still covering direct tax and IPT, would not compromise the Government's
clear control of policy on these matters. We again left the document
uncleared and asked the Minister to keep us informed of developments.
The Minister's letter
12.6
The Minister now tells us that the text she wrote to us about
earlier has been agreed by the Council and the European Parliament
without further amendment. This means that the text incorporating
the three changes described in paragraph 12.3 above is ready for
formal adoption.
Conclusion
12.7
We note that the text, on which the Minister based her assurance
that the UK will be able to maintain clear control over the sensitive
areas of tax policy, is now secured. We are content to clear
the document.
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