§ 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 Economic and Finance Council.
§ Mr. LamontThe Economic and Finance Council of the European Community met in Brussels under my chairmanship on 23 November. The Paymaster General represented the United Kingdom.
A national programme for economic convergence submitted by Belgium was discussed. The Council commended Belgium's record of price and monetary stability but concluded that fiscal consolidation was the key requirement in the conduct of Belgium's economic policy. The Council therefore welcomed the multi-annual measures which the Belgian Government have set in place and their new commitment to continue to reduce their debt ratio after 1996.
885WThe Council held a useful discussion about the future financing of the Community. Along with the United Kingdom, many member states continued to argue that the Commission's compromise proposals still involved unacceptable increases in expenditure. We also made it clear that the United Kingdom would not accept any adverse change to the abatement.
Sir Leon Brittan gave the Council a short outline of the Commission's proposals for changes in the EC legislative framework for banking supervision in the light of the Bank of Credit and Commerce International case.
Over lunch, the Council discussed the economic situation in the Community. I announced that there would be a full discussion of economic issues at the European Council and that consideration should be given to the measures which member states can take, both individually and collectively, to hasten economic recovery.
The Council also reached a political agreement on the investment services directive, the remaining financial services measure from the single market programme. All the Government's negotiating objectives were met concerning the outstanding issues which were discussed. The directive will offer worthwhile opportunities for the British financial services sector.
The report of the high-level group on fraud, set up at the United Kingdom's initiative, was also adopted and welcomed as containing useful proposals which would improve the effectiveness of measures to counter fraud in the Community.
Subject to reserves from Denmark and Germany, the Council also agreed to increase travellers' allowances so that travellers arriving from outside the Community will be able to bring in goods to a value of 175 ecu without incurring further tax; and that the amount for goods that tax-free shops can sell VAT free to travellers within the EC is restricted to the value of 90 ecu. Again, this was the welcome result of a United Kingdom initiative.
The excise simplification directive was also agreed subject to a German scrutiny reserve and final modifications to the text in the jurist/linguists group. Officials were urged to resolve the remaining issues for agreement in the VAT simplification directive. It was agreed that the 7th VAT directive should be discussed at the next meeting of ECOFIN on 14 December. Meanwhile the United Kingdom made it clear that we could not agree to the current proposals for VAT on works of art at import.
The taxation of road transport was also discussed as part of a package of proposals to liberalise road transport which will also be discussed at the Transport Council on 7 December. It was agreed that ECOFIN should return to this issue on 14 December.
Finally, the Council agreed, without further discussion, balance of payments loans to the Baltic states and Council conclusions on the Ruding report on corporate taxation. The latter emphasised importance of subsidiarity in this area and also identified a number of further criteria which need to be considered before any action is proposed.
These conclusions are a valuable step forward and establish an acceptable framework for future consideration of corporate tax issues in the Community.