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Volume 706: debated on Tuesday 9 December 2008


My right honourable friend the Chancellor of the Exchequer (Alistair Darling) has made the following Written Ministerial Statement.

The ECOFIN Council met on Tuesday 2 December 2008. The Chancellor and the Economic Secretary to the Treasury represented the UK. The following items were discussed.

Preparation of the December European Council

Finance ministers discussed and agreed ECOFIN's input to the European Council. The contribution covers the Commission's European economic recovery plan, which included recommendations regarding macroeconomic policies and structural reforms, and guidance regarding the implementation of SGP. Input on the response to the international financial crisis was discussed, following up on both the informal meeting of Heads of State or Government on 7 November, and the Washington summit on 15 November. On both these workstreams, the Government are fully supportive of a Europe in favour of the need for economic reform and financial stability.

Reduced rates of VAT

Following discussions at the September informal and meetings in October and November, Ministers held a brief discussion on reduced rates of VAT. Discussion was focused on a French presidency compromise text based on the Commission's July proposal to allow reduced rates for a specified set of goods and services. The UK believes that member states should be allowed the flexibility to apply reduced rates of VAT where they do not materially affect the functioning of the single market. The presidency concluded that unanimity was not achievable at this meeting. Further discussion is expected to take place under the Czech presidency.

Taxation of savings

ECOFIN agreed a set of conclusions on the ongoing extension of the savings directive, in line with the Government's view to include a reasonable extension to the scope of the directive while seeking to minimise any unnecessary additional burdens placed on business as a result of changes to the directive. Ministers agreed that negotiations should continue with non-EU financial centres to apply equivalent measures. The Government believe that the directive is an important tool in fighting tax fraud and continue to support its extension.

Code of Conduct on business taxation

The code of conduct group works to implement Finance Ministers' political commitment (endorsed at the December 1997 ECOFIN) to tackle harmful tax competition. Following agreement at a recent code of conduct meeting, ECOFIN adopted the code group's future work package. The Government continue to support the work of the group to tackle harmful tax competition.

Presentation by the Court of Auditors of the Annual Report 2007

The European Court of Auditors presented ECOFIN with the annual report on the implementation of the EC Budget for the financial year 2007. While some progress had been made, the court was unable to provide a clean bill of health for the majority of expenditure. The Commission emphasised the responsibility of member states. Work by the UK and three other member states on national declarations was welcomed, and the Commission confirmed that a communication on tolerable risk would issue shortly. ECOFIN will hold a further discussion in February regarding the council's recommendation to the European Parliament on discharging the Budget.