Local view for "http://purl.org/linkedpolitics/eu/plenary/2003-12-03-Speech-3-184"
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"en.20031203.15.3-184"2
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Mr President, on 23 July 2003, the Commission presented its proposal to simplify and rationalise the current situation with regard to reduced rates of VAT. This proposal, based on Article 93 of the Treaty, is intended to harmonise legislation to the extent that such harmonisation is necessary to ensure the smooth functioning of the internal market. Therefore, the Commission could not support modifications to its proposal that represented a step backwards. Having said that, I should like to make the following comments relating to the report presented by the Committee on Economic and Monetary Affairs.
In that context, I should like to remind Parliament that the Commission has already proposed to introduce, once and for all, housing and domestic care services into Annex H. That is part of the exercise of rationalisation of the present situation and takes into account the fact that reduced rates are already applied by a majority of Member States.
To conclude, for the reasons I have outlined, the Commission is still convinced of the merits of its proposal and I should like to invite Members to reconsider very carefully their position on this issue.
I agree with the rapporteur that it is not the time to make drastic changes. That is why the Commission did not propose any change to the level of the rates or the optional nature of reduced rates for Member States. On the other hand, it is necessary to rationalise the present situation.
The limited extension of Annex H, proposed by the Commission, is intended to reduce the discrepancies between Member States rather than increase them, in line with the objectives of the internal market. The extremely difficult discussions in the Council on this issue have highlighted the radically divergent views on the question of VAT and the use of reduced rates. That reinforces my belief that the Commission's proposal is a balanced one.
Any amendment which introduces new reduced rates in sectors where the standard rate is currently applied, such as for CDs, would be unacceptable, all the more so because the application of reduced rates could create competitive distortions. The addition to children's shoes and clothes is also unacceptable. Only three Member States are allowed to apply zero or super-reduced rates by temporary derogation. All other Member States are obliged to apply the standard rates.
The rapporteur proposes to maintain the present derogations, but suggests establishing a new annex to the sixth directive, which would include all the supplies for which only one Member State has a specific derogation, thus permitting all Member States to apply a reduced rate to such supplies. I am not convinced that this solution is feasible.
I want to stress that the Commission still favours a real phasing-out of these derogations. Politically speaking, they have always been considered transitory and due to disappear at a certain moment. Already in 1967, 1977, and again in 1992, at the time of the introduction of the internal market, the Council decided to authorise the Member States concerned to maintain these derogations. However, no absolute deadline was set by the Council. This does not mean, however, that they can remain indefinitely. That is why I am still convinced action is needed in view of the forthcoming enlargement, in order to give all Member States, both present and new, equal opportunities and to create a level playing field. I should like to remind you in this context that, for acceding countries, concrete deadlines have been laid down for all derogations. Finally, I should like to come back to you on the results of the last Ecofin meeting, which invited the Commission to extend Annex K for two further years.
I have also received a letter from your rapporteur which urges the Commission to extend the duration of Annex K for at least six years, in order have a total period of application of ten years. I should like to take this opportunity to explain why I am convinced that an extension of Annex K is not a realistic solution.
First, the Member States' and the Commission's reports have clearly shown that reduced rates are not a cost-effective way of creating employment. I have, however, already indicated to the Council that I was prepared to turn a blind eye to those Member States which, after the 1 January 2004, would continue to apply the reduced rates introduced within the framework of the experiment of reduced rates for labour-intensive services. This was to give the Council more time to find a solution based on the Commission's proposal. Such a situation could only continue for a short period of time: that is why I spoke of a period of six months.
An extension would merely postpone, once again, a solution to this problem. Moreover, it could give rise to the expectation that the experiment would become permanent. A simple extension would, moreover, exclude other Member States, and in particular the new Member States, from being able to introduce reduced rates in the sectors concerned and would therefore be an added source of discrimination."@en1
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