§ Mr. HoodTo ask the Chancellor of the Exchequer what the outcome was of the ECOFIN Council held on 21 January; what the Government's stance was on the issues discussed, including its voting record; and if he will make a statement. [93156]
§ Mr. Gordon BrownI attended the ECOFIN meeting on 21 January.
The Presidency and the Commission introduced their work programmes for ECOFIN. The principal objective would be to maintain a stable macroeconomic environment and boost confidence and growth through a renewed commitment to structural reforms.
The council reached political agreement on the tax package, based on proposals outlined by the presidency at the 3 December 2002 ECOFIN meeting, and discussed at the 11 December 2002 ECOFIN meeting.
The council confirmed the agreement at the Feira European Council that the objective of the EU should be exchange of information on as wide a basis as 606W possible. And it confirmed the rejection at Feira of an EU-wide withholding tax, which would have had severe implications for the London bond market.
Political agreement was reached that 12 member states will move to automatic exchange of information on the savings income of EU residents. Austria, Belgium and Luxembourg will move to automatic exchange of information by the end of the first full fiscal year from the date when the council agrees by unanimity that the third countries named at Feira have committed to the OECD standard of exchange of information on request.
Austria, Belgium and Luxembourg will operate a transitional withholding tax of 15 per cent. from 1 January 2004, 20 per cent. from 1 January 2007, and 35 per cent. from 1 January 2010. The council agreed that the EC should enter into an agreement with Switzerland, Liechtenstein, Monaco, Andorra and San Marino to adopt the same rates of withholding and maintain the 35 per cent. after adoption of exchange of information to the OECD standard.
The council assessed that in respect of dependent and associated territories the necessary reassurances had been received that the same measures would be applied as in EU member states, and that in respect of the United States the necessary reassurances had been received that equivalent measures would be applied.
The council committed itself to formal adoption of the tax package before the European Council in March 2003. This is dependent upon receiving firm offers from Switzerland, Liechtenstein, Andorra, San Marino and Monaco to enter into agreements as outlined, and on the council assessing the work of the Code of Conduct Group on the rollback of the identified harmful business tax measures of member states and of dependent and associated territories.
In furtherance of the ultimate objective of exchange of information on as wide a basis as possible, the council asked the commission to continue negotiations with Switzerland and the other third countries for the exchange of information and to report back to the council before 2007, and to enter into discussions with other important financial centres.
On the Stability and Growth Pact, the council adopted Opinions on the Stability and Convergence programmes of Sweden, Finland, Greece, Italy, Germany and France. The council adopted a Recommendation on an Excessive Deficit Procedure for Germany. It also adopted a Recommendation on an Early Warning for France, with France abstaining.
In view of the lengthy discussion on the tax package, the presidency decided to postpone discussion of energy taxation and VAT administrative co-operation to the 18 February ECOFIN.
No formal votes were taken at this meeting.