Economic and Finance Council (Hansard, 16 May 1997)

§ Mr. Gordon Brown

I represented the UK at the Economic and Finance Council—ECOFIN—of the European Union in Brussels on 12 May.

In the margins of the meeting, I spoke with Commissioner Monti, who confirmed that the Commission would not oppose a cut in the rate of VAT on domestic fuel in the UK to 5 per cent.

The Commission presented to the Council its Single Market Action Plan, which was broadly welcomed. Certain aspects of it were most welcome, in particular the emphasis on implementation and enforcement of legislation, action to combat unfair state aids and steps to complete the single market in financial services. The Action Plan will be considered further by the Internal Market Council on 20 May, then in final form by the Amsterdam European Council.

The Council carried out an examination of the convergence programmes of Portugal and Spain for the period 1997–2000. It welcomed Portugal's strategy of pursuing budgetary consolidation while ensuring price and exchange rate stability, and providing the conditions for economic growth and employment. The Spanish programme's commitment to promoting growth and employment through budgetary consolidation and structural reform, especially of labour markets, was also welcomed.

The Commission presented its proposals for the 1998 budget. The Council welcomed the Commission's commitment to limiting the growth in expenditure. The Preliminary Draft Budget will be considered by the Budget Council on 24 July.

The Council agreed to abrogate the excess deficit decisions relating to the Netherlands and Finland, and approved recommendations to all other Member States with an excessive deficit except the UK. The recommendation to the UK will be considered after my forthcoming Budget.

Arrangements for the consideration of the Commission's proposals for a directive on taxation of energy products were discussed. There was no discussion of the substance of the proposals.

In response to the Commission's presentation of its Action Plan for the reform of the customs transit system in Europe, the Council stressed the priority it attached to measures to tackle fraud.

The Presidency presented a report on the progress of discussions of proposals to extend the scope of the parent and subsidiaries directive, relating to the elimination of double taxation on profit distributions between companies in different Member States. Further discussions will be necessary to consider outstanding difficulties.

The Commission presented its proposed FISCALIS programme for reinforcement of indirect taxation systems. It was hoped that the proposal could be adopted before the end of this year.