23 The Lisbon Strategy
| (26989)
14042/05
COM(05) 532
| Commission Communication: The contribution of taxation and customs policies to the Lisbon Strategy
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| Legal base | — |
| Document originated | 25 October 2005
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| Deposited in Parliament | 11 November 2005
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| Department | HM Treasury |
| Basis of consideration | EM of 21 November 2005
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| Previous Committee Report | None
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
23.1 In March 2000 the Lisbon European Council set the ten-year
goal for Europe to become the most competitive and dynamic knowledge-based
economy in the world, capable of sustainable economic growth with
more and better jobs and greater social cohesion. This overall
goal was supplemented by a variety of objectives, such as making
a decisive impact on the eradication of poverty, increasing investment
in education and training, creating a European area of research
and innovation and the completion of a fully operational internal
market. The European Council set specific targets for the achievement
of some of these objectives. Together, the overall goal and supplementary
objectives are generally known as the Lisbon Strategy.
23.2 The Spring 2005 European Council noted that
"alongside undeniable progress" on the Lisbon Strategy
"there are shortcomings and obvious delays" and endorsed
a Commission Communication on a new start for the Lisbon Strategy,
which included a call for Member States to produce National Reform
Programmes.[44] The June
2005 European Council repeated the call for National Reform Programmes
and asked the Commission to complement these with a "Lisbon
Community programme covering all the action to be taken at Community
level". In July 2005 the Commission responded with a Communication
containing the "Lisbon Community Programme", which is
based on "integrated guidelines for growth and jobs"
endorsed at the same European Council. [45]
The Lisbon Community Programme contains a series of measures under
three broad headings: knowledge and innovation for growth; making
Europe a more attractive place to invest; and work and creating
more and better jobs. The Programme lists nearly 100 proposed
activities under three headings — regulatory, financing
and policy development and suggests concentrating on a number
of them as key actions.[46]
The document
23.3 This Communication is part of the Community
Lisbon Programme and sets out "the key Community taxation
and customs policy measures" the Commission believes would
contribute towards meeting the Lisbon Strategy aims. In an annex
the Commission lists 17 policy measures under two of the Programme's
broad headings — making Europe a more attractive place to
invest and work, and knowledge and innovation for growth. These
policy measures, several of which have been or are being reported
on by the previous Committee or us, are:
Under the rubric making Europe a more attractive
place invest to and work
— by extending and deepening the internal
market
- Presentation by 2008 of a legislative
proposal for a Common Consolidated Corporate Tax Base for Community
businesses (policy measure 1);
- simplifying the tax environment and creating
a level playing field with a proposal in relation to VAT compliance
obligations (2),[47]
a Communication on experimental home state taxation for small
and medium enterprises to be presented before the end of 2005
(3), proposals on VAT rules international services[48]
and financial services — the latter to be presented in 2006
(4) and a proposal to amend the VAT rules in relation to public
authorities competing with private businesses to be presented
before the end of 2006 (5);
- presenting in 2006 targeted measures to remove
cross-border tax barriers faced by Community businesses with a
Communication on cross-border loss relief to be presented (6),
a code of conduct transfer pricing documentation (7)[49]
and a proposal to recast the Capital Duty Directive (Directive
69/335/EEC) as amended to be presented by the end of 2006 (8);
- presentation of legislative proposal for "a
new strategy for car taxation" (9);[50]
- presentation in 2006 of a Communication on reducing
distortions created through tax fraud and tax evasion (10);
— by ensuring open and competitive markets
inside and outside Europe
- presentation of a Communication
on responses to counterfeiting (11)[51]
- presentation by the end of 2005 of a Communication
on a modernised Customs Code, as a contribution to promoting e-Customs
(12);
— by improving Community and national legislation
- modernising VAT rules, including
presentation by the end of 2005 of a legislative proposal relating
to double taxation and conversely non-taxation (13);
Under the rubric knowledge and innovation for
growth
— by increasing and improving investment
in research and development
- presentation in 2006 of a Communication
providing guidance to Member States on research and development
tax incentives (14); and
— by facilitating the sustainable use of
resources
- in the context of using energy,
transport and environment-related taxes as facilitators, presentation
of a proposal on taxation of commercial diesel by the end of 2005
(15), a possible proposal in 2006 to amend the Energy Tax Directive
to introduce more ambitious targets for energy taxation (16) and
using the 2005 legislative proposal for "a new strategy for
car taxation" to foster reduction of CO2 emissions
from passenger cars (17).
The Government's view
23.4 The Paymaster General (Dawn Primarolo) says
the Government strongly supported the re-launching of the Lisbon
Strategy at the 2005 Spring Council and agrees with the Community
Lisbon Programme assertion that the primary responsibility for
the success of the strategy lies with Member States introducing
the necessary structural reforms. She notes that this document
reiterates the Commission's views on a number of tax and customs
policy measures and is consistent with the Commission's priorities
on tax outlined in its Communication on the Community Lisbon Programme.
The Minister comments that the Government remains clear that such
issues are a national preserve and that fair tax competition,
not tax harmonisation, is the way forward for the Community.
23.5 The Minister also comments on some of the individual
elements in the Communication saying:
- the Government welcomes the
reference to the proposal to simplify the current VAT compliance
obligations (policy measure 2), on which Council Working Group
discussions have resumed under the UK Presidency;
- it welcomes the Communication on responses to
counterfeiting (11); and
- it will examine carefully any new proposals for
legislation on taxation of commercial diesel (15) and environmental
targets for energy taxation (16) to assess if they are necessary
and proportionate.
Conclusion
23.6 The document usefully summarises much of
the ongoing Community activity on taxation and customs matters
and illustrates the Commission's continued ambitions in relation
to taxation. We are pleased to notice also the Government's continued
vigorous response to these ambitions and clear the document.
44 See (26351) 5990/05: HC 38-xii (2004-05), para 12
(23 March 2005). Back
45
See (26488) 8008/05: HC 34-i (2005-06), para 57 (4 July 2005). Back
46
See (26765) 11618/05: HC 34-x (2005-06), para 22 (16 November
2005). Back
47
See (26118) 14248/04: HC 34-xi (2005-06), para 7 (23 November
2005). Back
48
See (25221) 5051/04: HC 42-xviii (2003-04), para 4 (28 April 2004)
and (26739) 11439/05: HC 34-v (2005-06), para 6 (12 October 2005). Back
49
See (26999) 14264/05 in para 27 of this report. Back
50
See (26714) 11067/05 + ADD1: HC 34-xi (2005-06), para 8 (23 November
2005). Back
51
See (26915) 12369/05: HC 34-x (2005-06), para 21 (16 November
2005). Back
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