Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-12-01-Speech-4-010"
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".
Mr President, before I start my introductory remarks I would like to offer my apologies to you and to the honourable Members for the delay. We had some traffic problems but now I am here and I will let you know the position of the Commission.
However, there are some conditions. First, only locally delivered services should be added to the existing scope of the reduced VAT rate provisions. The extension of reduced rates to new categories of goods should be avoided, as the risk of creating distortions of competition is too high.
Second, the mere prolongation of the existing experimental reduced rates for labour-intensive services is neither viable nor desirable. Although I was initially tempted by this solution, we have to recognise that it is an illusion to believe that a mere prolongation has more chance of being unanimously adopted by the Council than the compromise currently under discussion. Furthermore, this experiment has been limited to nine Member States and a mere prolongation would only prolong the unequal treatment of Member States. I have to stress that the Council has already had more than two years to reach a decision. It should not duck its responsibilities yet again.
Third, the compromise must be fair in the sense that it should represent a step towards the equal treatment of all Member States. In my view, the UK Presidency proposal for an initial extension of the time-limited derogations for the new Member States to 2015 would precisely contribute to this objective.
I know that some of the honourable Members might not entirely agree with this line, especially as regards the extension of the labour-intensive services. Let me, therefore, take this opportunity to remind them of the fact that when the Council agreed on the second extension of the reduced rates for labour-intensive services for two more years, the Commission considered that the same possibilities should be offered to the new Member States. At the time of the pre-accession negotiations, the possibility of applying reduced rates to labour-intensive services was not considered relevant since the experiment was due to end on 31 December 2003, i.e. before EU enlargement. Therefore, the extension of measures constituted a new element calling for a review of the situation. The situation is clearly not the same as it was in 2003 and it is therefore exceedingly unlikely that the Council will – as it did previously – unanimously request that the Commission propose an extension. In addition, a simple extension of the labour-intensive services experiment offers no solutions for the widespread demand to also include restaurant services in the scope of the reduced rates, because currently they are not in Annex K.
In conclusion, I consider it to be imperative that the Council should now draw up the lines of a viable compromise with a view to a political decision in December during the last Ecofin meeting under the UK Presidency. However, the Commission is in the hands of the Council and we can do no more than help the Council as much as possible to reach an agreement.
As the Commissioner responsible for taxation, I can assure you that the Commission is prepared to do its utmost and show the maximum flexibility during the Ecofin meeting on 6 December in order to help reach unanimous agreement on the basis of the UK compromise.
Finally, I should like to comment briefly on the eighth directive proposal. On several occasions I have underlined that one of the ways of attaining the Lisbon Objectives is to reduce cross-border administrative burdens and compliance costs in order to facilitate Community-wide activities by businesses. Today it will be possible to take the next step towards this objective. The proposal which is tabled today is part of the larger package known as the one-stop-shop scheme. The other parts of the overall proposal – the simplification measures, whereby taxable persons can discharge their VAT obligations in the Member States of establishment, and the rules containing the exchange of information between Member States – were adopted by this Parliament in September. This part of the proposal aims at reforming the VAT refund procedure for traders who have to reclaim their VAT in a Member State in which they are not established. An entirely electronic procedure will replace the current burdensome paper-based eighth directive refund system. As a result of the new proposal, it will become possible to speed up the VAT refund procedure substantially. This will be of particular help for small and medium-sized enterprises. In this respect I welcome the positive contribution of the rapporteur, although I cannot accept the proposed amendments. Most of the issues are actually already covered by the Commission’s proposal on the one-stop-shop package. I therefore invite you to support the original position of the Commission.
Now I am eager to listen to your opinion on the three VAT dossiers on the agenda of this meeting and in my closing remarks I shall take a position on the amendments that have been tabled.
I would like to express my thanks to the rapporteur, Mr Becsey, for his two reports, and to Ms Berès for the oral question on such an important issue which is very close to my heart. I will first comment on the proposal on the minimum standard VAT rate. I will continue with comments on the oral question and the motion for a resolution concerning the reduced VAT rate. Finally, I will comment briefly on the eighth VAT directive proposal, which is part of the one-stop-shop package on which an extended debate took place in this House back in September.
The Commission thanks the European Parliament for the quick handling of the minimum standard VAT rate proposal and in particular the rapporteur, Mr Becsey, for his active and positive contribution. This proposal needs to be adopted as a matter of urgency as the present rules come to an end on 31 December 2005. The absence of a timely decision would imply a legal gap in EU legislation.
The rules concerning the standard VAT rate currently in force combined with the transitional system mechanisms have functioned so far to an acceptable degree. It is therefore appropriate to maintain the current minimum standard rate at 15% for a further period of five years in order to cover the ongoing implementation of the strategy to simplify and modernise the current Community legislation on VAT.
For your information, the proposal has received a positive reaction from the European Economic and Social Committee. The committee has acknowledged that in the current environment – i.e. the rule of unanimity – the Commission’s proposal is the best way forward. I would like to stress that, while I fully understand the concerns of the honourable Members regarding the absence of a decision in the Council only one month away from the expiry date for the reduced rates for labour-intensive services, I do not think that the current proposal can be used to solve this problem. Therefore I would very much urge honourable Members not to make a link between this dossier and the discussions on the scope of the reduced VAT rates which are currently being held in the Council on the basis of the Commission’s 2003 compromise proposal.
I now come to the oral question and the motion for a resolution concerning the reduced VAT rates on labour-intensive services. I would like to thank you for putting this question to the Commission. I am conscious that this issue is of high concern to the public and to business. I am also very much concerned about this issue as the current regime to apply reduced VAT rates on labour-intensive services is due to expire at the end of this year. I very much appreciate the UK Presidency’s efforts to find a compromise on reduced VAT rates. This issue was discussed at the Ecofin Council on 8 November and will be discussed again on 6 December. The absence of a decision by the Council before the end of this year on the application of reduced rates to labour-intensive services would be a very bad outcome. Businesses are very concerned as they need legal certainty. I can assure you that the Commission will do its utmost to help the Presidency reach a conclusion on this matter.
Without going into details about the Presidency’s compromise, I want to explain the difficulties that have arisen in previous debates on this issue. Some delegations reject any extension of Annex H as a matter of principle. I must say that I do not really understand that position. The reduced rates listed in Annex H are optional, so that, apart from a few categories in respect of which reduced rates are largely applied throughout Europe, there are already today huge disparities between Member States.
If we take into account the numerous specific derogations granted to some Member States, these disparities become even bigger. Restaurant services are a very good example. Currently half of the Member States apply reduced rates to restaurant services by way of specific derogations and this has not given rise to any complaints or distortion of competition. Why not, therefore, give the opportunity to all Member States to apply a reduced rate in this sector if they wish to do so? Some Member States press for more subsidiarity. The budgetary impact of applying additional reduced rates also comes into play. In my view only very few sectors are really relevant in this respect. In principle, only restaurants and construction services might have a significant potential budgetary impact. For instance, regarding the building sector the Council could explore criteria for restricting the scope of the reduced rates in order to limit the possible budgetary impact for example by limiting the reduced rate to buildings over a certain age.
I want to underline the economic importance of the building sector. You know that the Commission has always been doubtful about the positive employment effects of introducing reduced VAT rates. This is still the case. Nevertheless, we have to realise that at least in this sector the VAT rate plays an important role. In contrast to the reduction of the rate, its increase by the reintroduction of the standard rate could well lead to an immediate increase in prices for consumers. This would have negative consequences for employment and could even encourage the black economy in the Member States concerned. I am aware that businesses, the Member States concerned and the European Parliament have great concerns in this regard. Therefore I consider that there are good political and economic arguments to allow at least the preservation of the status quo in this sector."@en1
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