TAXATION SYSTEMS AND CUSTOMS IN THE COMMUNITY
(9500/06, 9609/06)
Letter from Rt Hon Dawn Primarolo MP,
Paymaster General, HM Treasury to the Chairman
Thank you for your letter of 18 July 2006,[14]
following consideration by Sub-Committee A on the proposals for
both Fiscalis and Customs 2013, confirming scrutiny clearance.
I am pleased to provide information on the legal base relating
to tax legislation as well as more specific detail about the use
of Article 95 for the programmes in question.
Article 93 of the Treaty provides a specific
legal basis for the harmonisation of indirect tax provisions to
ensure the establishment and functioning of the internal market.
Decisions are by unanimity. There is no corresponding legal basis
in the field of direct tax. Article 94 of the EC Treaty provides
"for the approximation of such provisions laid down by law,
regulation or administrative action in the Member States as directly
affect the establishment or functioning of the Common Market"
but it does not provide a legal basis to propose harmonisation
of direct taxes as an end in itself. Decisions under Article 94
are by unanimity.
By way of derogation from Article 94, Article
95 (the proposed legal base for Customs and Fiscalis 2013) provides
for a range of approximation measures to be adopted by QMV. However,
Article 95 does not apply to fiscal provisions, which according
to recently settled ECJ case law covers not just the setting of
tax rates and bases, but also procedural rules with a potential
impact on tax rates and bases.
The Government therefore considers that proposals
on administrative co-operation in the field of taxation based
on Article 95 need to be looked at with particular care to ensure
consistency with this case law, a view shared by the Council Secretariat
Legal Services. The Government will therefore approach the negotiations
of Customs and Fiscalis 2013 with that principle firmly in mind.
I hope you find this helpful.
4 October 2006
Letter from Rt Hon Dawn Primarolo MP to
the Chairman
This proposal was cleared by the European Scrutiny
Committee on 11th October 2006 and by the European Union Select
Committee on 18 July 2006. I am now writing to both Committees
to advise that agreement was reached through informal contacts
between the Council, the European Parliament and the Commission
to secure acceptance of this dossier at first reading.
The proposal was examined by the Council Customs
Union Group. In the discussions amendment was secured to Article
1 to make it clear that this was a 1st Pillar Programme. This
addressed concerns expressed by the European Scrutiny Committee,
that Customs 2013 would not be restricted to the 1st Pillar.
Other amendments agreed during the first reading
were mainly minor changes to the drafting, although the European
Parliament put forward amendments to ensure greater transparency
in the budget process. These had our full support.
25 January 2007
14 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, pp46-47. Back
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