8 Customs and taxation
| (33373)
16901/11
+ ADDs 1-3
COM(11) 706
| Draft Regulation establishing an action programme for customs and taxation in the European Union for the period 2014-2020 (FISCUS) and repealing Decisions No 1482/2007/EC and No 624/207/EC
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| Legal base | Articles 33 and 114 TFEU; co-decision; QMV
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| Documents originated | 9 November 2011
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| Deposited in Parliament | 18 November 2011
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| Department | HM Revenue and Customs
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| Basis of consideration | EM of 1 December 2011
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| Previous Committee Report | None
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| Discussion in Council | Not known
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
8.1 The Customs 2013 Programme is a EU action programme, which
provides funding for customs activities which support the effective
functioning of the single market and fall within the exclusive
competence of the EU, including:
- implementation of the Modernised Customs Code;
- introduction of a pan-EU paperless customs environment;
and
- providing a legal base and EU funding for the
maintenance and development of EU communication and information
exchange systems such as the New Computerised Transit System and
the Common Communications Network (CCN/CSI).
The main objectives of the programme are to:
- reinforce security and safety
within the EU and at the external border;
- protect the financial interest of the EU and
Member States by strengthening the fight against fraud; and
- increase the competitiveness of business by speeding
up customs procedures through the creation of a pan-EU paperless
electronic customs environment.
These objectives are achieved in a variety of ways,
mainly through programme actions such as the exchange of customs
officials, seminars and project groups, but also by providing
an important platform for funding e-Customs and notably, the Multi-Annual
Strategic Plan, the roadmap for delivering e-Customs. The programme
ends on 31 December 2013.
8.2 The Fiscalis 2013 Programme is an EU funded programme
which is designed to improve the operation of taxation administration
systems in the single market, through strengthened administrative
cooperation between Member States and candidate countries, their
administrations and officials. The main objectives for the programme
are to:
- secure efficient, effective
and extensive information exchange and administrative cooperation;
- enable officials to achieve a high understanding
of EU law and its implementation in Member States; and
- ensure the continuing improvement of administrative
procedures to take account of the needs of administrations and
taxable persons through the development and dissemination of good
administrative practices.
These objectives are achieved in a variety of ways,
but mainly through programme actions such as the exchange of officials,
seminars and project groups. This programme is also ending on
31 December 2013.
8.3 The Commission published mid-term reviews on
these programmes in September 2011.[56]
The document
8.4 The Commission now proposes creation of a successor
to the Customs 2013 and Fiscalis 2013 programmes, by merging both
into a single successor programme, "FISCUS", which would
run from 2014 to 2020. FISCUS would be an administrative cooperation
programme, which aimed to share best practice and increase cooperation
between Member States and candidate countries, their administrations
and officials. The previous programmes have been governed by two
Council Decisions, but it is proposed that FISCUS would be under
a Council Regulation.
8.5 The Commission says that the purpose of the FISCUS
programme is:
- to contribute to the Europe
2020 Strategy for smart, sustainable and inclusive growth, by
strengthening the functioning of the EU's single market and its
customs union;
- driving technical progress and innovation in
national tax administrations with the aim of developing e-tax
administrations;
- to contribute to the establishment of a digital
single market, under the Digital Agenda for Europe, the overall
aim of which is to deliver sustainable economic and social benefits
from a digital single market.
8.6 The Commission proposes a budget for the seven
year period of €777.6 million (£665.5 million, which
would be allocated through annual work programmes drawn up by
the Commission each year, on the basis of the priorities identified.
This represents an increase of 39% over the combined budgets of
the previous programmes.
The Government's view
8.7 The Economic Secretary to Treasury (Miss Chloe
Smith) tells us first, in relation to the subsidiarity principle,
that:
- the FISCUS programme aims to
support the effective functioning of the customs union and supports
activities on matters within exclusive EU competence and it therefore
passes the subsidiary test; and
- the Government takes the view that tax matters
remain primarily for Member States — however, as the FISCUS
programme is to be focused on improving administrative cooperation
and sharing best practice between Member States, some EU level
action to strengthen administrative practices in the single market
is appropriate and justified.
8.8 On the policy implications of the proposal the
Minister says that:
- the Government supports the
ongoing work and outputs of the existing Fiscalis and Customs
programmes — the UK has benefited from participation and
funding for a range of cooperation activities and the maintenance
and development of EU communication and information exchange systems;
- it has concerns, however, about the proposed
merger of the two programmes, hitherto governed by two Council
Decisions, into a single programme under a Council Regulation;
- it does not believe that the programmes are suited
to combination, as tax matters remain primarily a Member State
competence, whereas the customs union is an area of exclusive
EU competence;
- no compelling justification has been provided
for merging the programmes nor has there been any evaluation or
assessment of the possible risks of proposed merge; and
- for these reasons the Government would strongly
prefer the Commission to separate the two programmes to enable
the important issues under each to be properly and separately
examined by the appropriate Council working groups.
8.9 The Minister continues with more detailed comments,
saying first, in relation to tax matters:
- the tax elements of the proposal
use Article 114 TFEU as the legal base;
- the Commission says that the tax component is
not aimed at harmonising taxes, but at reducing the negative effects
related to the co-existence of 27 different tax systems, such
as distortions of competition, administrative burden for administrations
and taxpayers and tax shopping, and therefore is an internal market
support measure;
- the proposal's objective is to contribute to
the efficient functioning of customs and tax authorities —
the Government's view is that Article 113 or 115 TFEU would be
a more appropriate legal base for tax measures such as this;
- the new FISCUS programme would be broader in
scope than the Fiscalis 2013 programme, in addition to VAT, excise
duties on alcohol and tobacco and taxes on energy products, it
would also cover administrative co-operation and best practice
sharing on all taxes falling within the scope of Art2(1)(a) of
the Mutual Assistance and Recovery of Claim Directive;
- the Government does not think the programme should
be extended to cover direct tax matters and would prefer to see
the programme resources used towards administrative co-operation
and best practice sharing on cross-border VAT and excise matters;
- the FISCUS proposal also contains a specific
objective — 'to prevent fraud and tax evasion';
- the Government takes the view that measures establishing
cooperation between competent authorities for the purpose of the
prevention, detection and investigation of criminal offences should
be adopted under Article 87 TFEU and consequently that the UK
Justice and Home Affairs opt-in is engaged; and
- the Government will seek to clarify the Commission's
position during negotiations, with a view to securing amendments
to the text, but it is proceeding on the basis that the opt-in
Protocol (No 21 of the TFEU) would apply.
8.10 Secondly, on customs matters the Minister says
that:
- the Government welcomes the
specific orientation of the proposed measures to improve the functioning
of the customs union;
- this supports important work on the Modernised
Customs Code and facilitating legitimate trade, which must be
the Government's first priority;
- the FISCUS proposal includes provision for a
number of new activities for customs, including funding for EU
expert teams and new models for IT procurement and management
of services at an EU level; and
- the Government will be querying the purpose of
these provisions and will seek to ensure that participation in
programme activities remains voluntary, so that Member States
retain flexibility to engage in EU level activities which meet
their needs.
8.11 On the budgetary implications of the draft Regulation
the Minister says, in relation to the Commission proposal of a
39% increase in the programme budget, that the Government does
not support this increase in programme resources at a time of
public spending restraint and will challenge the increase proposed,
argue for a freeze in the budget, along with a re-prioritisation
of activities to focus on those of greatest benefit to Member
States.
Conclusion
8.12 Whilst cooperation on administrative aspects
of customs and taxation can be beneficial we are concerned about
two aspects of this proposal, to which the Minister draws our
attention. First, is the question of the correct legal bases for
the proposal. We agree with the Government that Article 114 TFEU
is not an appropriate legal base for this proposal and that Articles
113 or 115 TFEU would be more appropriate. We should like to hear
about the results of the Government's efforts to achieve a change
in this regard.
8.13 We also agree that Article 5 (1)(c) of the
draft Regulation as it stands appears to need a Title V legal
base — Article 87 TFEU. We should like to hear also about
the outcome of the Government's efforts to have this wording changed
so as to obviate the need for a Title V legal base. If, however,
the Government does not secure such a change we wish to know whether
it will insist on Article 87 being added as a legal base, whether
it intends to opt into negotiation of this aspect of the proposal
or whether it intends to consider an opt-in after adoption of
the proposal.
8.14 The second matter of concern is the very
significant increase in expenditure proposed by the Commission.
Again we wish to hear about the outcome of the Government's efforts
to limit the financial consequences of the draft Regulation.
8.15 Meanwhile the document remains under scrutiny.
56 (33080) 13884/11 (33128) 14004/11: HC 428-xxxviii
(2010-12), chapter 20 (19 October 2011). Back
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