8 TAXATION
(28824)
12010/07
SEC(07) 958
| Commission Recommendation to the Council to authorise the Commission to begin negotiations on the Community's participation in the work of the International Tax Dialogue
|
| Legal base | Articles 181a(3) and 300(2); —; unanimity
|
| Document originated | 11 July 2007
|
| Deposited in Parliament |
25 July 2007 |
| Department | HM Treasury
|
| Basis of consideration |
EM of 31 July 2007 |
| Previous Committee Report |
None |
| To be discussed in Council
| Not yet set |
| Committee's assessment | Politically important
|
| Committee's decision | Not cleared, further information awaited
|
Background
8.1 The International Tax Dialogue (ITD) is a forum between the
OECD, the IMF and the World Bank. Its aims are to:
- encourage dialogue among participants on tax matters, in order
to provide all countries with information to consider in their
deliberations on taxation policy and administration;
- identify and share good tax practice;
- coordinate tax-related activities currently under way to avoid
duplication; and
- provide useful information for technical assistance in tax
matters.
The ITD has no rules of association or legal status and is governed
by a written agreement between the three organisations.
The document
8.2 The Commission has been invited to join the ITD as a fourth
participating organisation representing the interests of Member
States. Membership would require a contribution from the Community
Budget of €130,000 (£87,272) annually for a five year
period. In this document the Commission recommends that the Council
authorises it negotiate its participation in the ITD.
The Government's view
8.3 The Exchequer Secretary to the Treasury (Angela Eagle) comments:
- to the extent the ITD programme concerns issues which are
within the acquis of the Community the subsidiarity test
is met but to the extent the ITD's agenda encompasses areas of
the tax system that remain a matter for Member States the subsidiarity
test would clearly not be met by the Commission recommendation;
- the Government is generally supportive of the ITD's activities
in the area of administrative cooperation and the sharing of best
practice. But the forum's aims and scope go beyond tax administration
and cover the full range of tax matters. The Community does not
have sufficient legal competence to represent Member States with
third parties on matters that remain subject to national competence,
such as tax policy;
- Article 181a EC says that "within their respective spheres
of competence, the Community and The Member States shall cooperate
with third countries and with the competent international organisations."
Consequently effective participation in the ITD forum by the Community
would require an extension of the Community competence over tax
policy matters. The Government does not support this;
- the Commission presents the proper functioning of the internal
market as one of the main arguments in support of its proposal
for engaging with the ITD. The Government is not convinced that
in practice Community membership would help to realise that objective
to any significant extent. Moreover Article 181a EC would not
be an appropriate legal base for that objective; and
- the Government is not convinced that proposed budget for joining
the ITD would be a valuable use of Community resources —
the cost would offer little benefit to Member States or the Community's
interests as a whole.
8.4 The Minister summarises the Government's view as:
"… supportive of the ITD's activities in the area of
administrative cooperation and sharing of best practice. However,
[the Government] believes that the OECD, IMF and the World Bank
are sufficient and suitable members for representing the UK's
interests within ITD, and is not convinced that the membership
of the Community as proposed in this recommendation would deliver
any significant benefit and would also represent an unwelcome
extension of Community competence in the field of taxation."
Conclusion
8.5 Given that matters dealt with by the International Tax
Dialogue are almost wholly outside Community competence and that
this proposal is subject to unanimity, we presume that the Government
will ensure the possibility of Community membership and the proposed
role for the Commission come to naught. We should be grateful
if the Minister would confirm that this will be the case. Meanwhile
we do not clear the document.
| 
