§ Mr. BurnsTo ask the Chancellor of the Exchequer if he will make a statement on the outcome of the latest meeting of the European Community's Council of Economic and Finance Ministers.
§ Mr. MaplesThe Economic and Finance Council of the European Community met in Brussels on 16 December. I represented the United Kingdom with the Minister for Corporate Affairs.
The Council discussed the Portuguese Government's programme for economic convergence, and welcomed their ambitious targets for reducing inflation to a ceiling of 4 per cent. by the end of 1995, the general Government deficit to no more than 3 per cent. of GDP by 1995 and lowering the debt ratio. But the Council stressed that the achievement of these targets is highly dependent on the budget for 1992, the growth rate that is realised and the appropriate mix of policy instruments. The Council invited the Commission and the monetary committee to monitor the implementation of the programme and to report back to the Council before the end of 1992.
The Council confirmed the agreement in principle reached at the Foreign Affairs Council that morning on a new package of emergency food aid to the value of 200 mecu for Moscow and St. Petersburg, and, if appropriate, other cities. Of this aid, 100 mecu can be released immediately and a further 100 mecu following consultation of the European Parliament in mid January. The earlier proposals for a loan totalling 1.25 becu for three years was also formally adopted and it was agreed that the first tranche, of 500 mecu should now be released as soon as possible.
The Council discussed the ideas for a carbon/energy tax contained in the Commission's communication and took note of reports from the fiscal aspects group and the conclusions of the joint Energy and Environment Council held on 13 December. It was agreed that the fiscal aspects working group should undertake work on the basis of additional analysis of the issues by the Commission and that the Council would re-examine the question before May in preparation for the UNCED Council in Rio.
223WThe Council discussed several matters relating to the abolition of fiscal frontiers, and formally adopted the directive on the VAT transitional arrangements to apply after 1992.
Political agreement was reached on the draft directive on the arrangements for the holding, movement and control of goods subject to excise duty. This agreement includes satisfactory provision for minimum indicative levels to distinguish between commercial and private transactions in tobacco products and alcoholic drinks, since commercial transactions are taxed in the country of destination while private transactions are taxed in the country of origin. The minimum indicative levels agreed were as follows:
Item Amount Cigarettes 800 Cigarillos 400 Cigars 200 Smoking tobacco 1kg Spirits 10 litres Intermediate products 20 litres Wine 190 litres Beer 110 litres 1 Including a maximum of 60 litres of sparkling wines. Above these levels, the transaction may be taken to be of a commercial character unless the person concerned can establish to the satisfation of the fiscal authorities that it is not.
For limited period, Ireland will be able to apply minimum indicative levels for wines and beer at 50 per cent. of the levels generally agreed. Special arrangements were also agreed to allow Denmark to continue to apply its current travellers' allowances on spirits and tobacco after 1992.
Subject to parliamentary scrutiny, agreement was also reached on extended and modified derogations for Ireland and Denmark from the directive on travellers' allowances, to apply during 1992.
Denmark will continue to apply its current levels of travellers' allowances, while for Ireland, the agreement provides for the following revised allowances:
Current allowance Allowance to apply in 1992 Cigarettes (number) 150 300 Smoking tobacco (grams) 400 400 Spirits (litres) 0.75 1.5 or Intermediate products and sparkling wine (litres) 1.5 3 Still wine (litres) 2.5 5 Beer (litres) 112and25 115 and 30 Other products (ecu) 2110 3175 1 for travellers out of the Republic for less and more than 24 hours respectively 2 subject to a single item limit of 95 ecu 3 subject to a single item limit of 150 ecu for travellers out of the Republic for more than 24 hours, 110 ecu for less than 24 hours. The Council also took note of a progress report by the Dutch presidency on the last six months and the work to be done before 1 January 1993.
The Community's acceptance of the "Helsinki package" of reforms to the OECD consensus on export credits was confirmed. This agreement incorporates a welcome reduction in trade distorting export credit 224W subsidy to the benefit of taxpayers and a tightening of the rules on the provision of tied aid subsidies so that these are better targeted on aid-worthy projects in aid-worthy countries.
The Council took note of a report from the Commission on a proposal for a directive on withholding taxes on interest and royalty payments and remitted the proposal to a working group for further work.
The Council also took note of a joint report from the Commission and the European investment bank on lending by the European investment bank outside the Community.
The conclusions of that morning's meeting of the Transport Council on road transport taxation were remitted to an ad hoc working group for further discussion.
The investment services directive was also discussed in a group of personal representatives at which the Minister for Corporate Affairs represented the United Kingdom. No decisions were reached.