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Volume 406: debated on Wednesday 11 June 2003

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To ask the Chancellor of the Exchequer what the outcome was of the ECOFIN Council held on 3 June; what the Government's stance was on the issues discussed, including its voting record; and if he will make a statement. [118069]

At the ECOFIN on 3 June, the UK was represented by our Permanent Representative to the EU and by the Treasury's Managing Director of Macroeconomic Policy and International Finance.ECOFIN formally adopted all elements of the tax package—the directive on the taxation of savings, the Code of Conduct on harmful business taxation and the directive on interest and royalties—on the basis of the 19 March ECOFIN Conclusions. The adoption of the tax package is a major success for the UK. The directive on the taxation of savings will tackle the problem of tax evasion on savings income by exchange of information rather than through an EU-wide withholding tax that would have damaged the interests of the City of London. And the Code of Conduct sets an important principle because it demonstrates what member states can achieve, working together to achieve unanimous political agreement, and rejects tax harmonisation in favour of fair tax competition.The Italian request for a Council decision under Article 88(2) on the repayment of Italian milk quota fines was approved, as was the Belgian Article 88(2) request on co-ordination centres. ECOFIN noted a Commission presentation on the progress of the anti-fraud negotiations with Switzerland.The Council adopted a Decision on the existence of a French excessive deficit. It also agreed, by qualified majority with Denmark and the Netherlands voting against, a Recommendation calling on France to bring back its deficit below 3 per cent. by 2004 at the latest. ECOFIN agreed, by qualified majority with Denmark and the Netherlands voting against, a report on the Broad Economic Policy Guidelines (BEPGs) for 2003–05 for submission to the European Council at Thessaloniki. Finance ministers also agreed a covering note to the European Council highlighting the key priorities to boost growth, in particular more flexible labour markets. The note, which has been published on the Council Website, states that:

"It is essential to achieve higher and sustainable growth in our economies through appropriate macroeconomic policies and structural reforms. We have made progress with the Lisbon economic reform agenda, but much remains to be done. We must step up the pace of reform and achieve more flexible economies that show a stronger resilience in the face of uncertainty and shocks".

ECOFIN discussed a Commission report on Follow-up to the International Conference on Financing for Development (Monterrey—2002), which was also discussed at the last General Affairs and External Relations Council (GAERC). The UK welcomed the report and called on member states to deliver on their Monterrey commitments.

Ministers took note of Commission reports on the Financial Services Action Plan and on ED financial integration. They also agreed, together with the accession countries, a Council Statement calling on the US to exempt EU audit firms from the compulsory registration requirement with the new US Oversight Board, under the Sarbanes- Oxley Act.

The Presidency outlined progress on the Investment Services Directive. The UK expressed support for the objectives of the directive, but raised concerns about the proposals on mandatory quote disclosure rules and the treatment of execution only business.

A vote was taken on the Recommendation to France on their excessive deficit and on the Broad Economic Policy Guidelines. The UK was part of the qualified majority.