Michael Noonan
Question:3 Mr. Noonan (Limerick East) asked the Minister for Finance the proposals he has put and intends to put before the Council of Finance Ministers regarding tax harmonisation in the EC.
Ceisteanna—Questions Oral Answers - EC Tax Harmonisation.
As the Deputy will be aware, it is the responsibility of the Commission to bring forward proposals in this area. Last year the Commission revised its earlier 1987 proposals on harmonisation of VAT and excises and submitted a new set of proposals which have been the basis for discussion in the Council of Ministers and in the various groups reporting to the Council.
As a result a broad framework agreement on VAT was reached last December. This agreement was designed to achieve some convergence in VAT rates while leaving open the precise rates to apply in 1993 and the classification of items which would be subject to the standard and reduced rates.
While the timetable does not provide for decisions until end-1991, the Irish Presidency has been pressing ahead with the follow-up work on such matters as coverage of the reduced VAT rates. We have also undertaken detailed discussions on the new excise proposals on mineral oils, alcohols and tobacco.
Progress on settling the shape of the detailed VAT regime for exports and imports has been hindered by the absence of Commission proposals on the necessary technical controls which will be required to be implemented following the abolition of fiscal frontiers. These have just been finalised and will be presented formally to the June ECOFIN Council meeting.
While progress has been slow, the Deputy will appreciate the sensitive economic and budgetary issues involved for all member states and the need, at the end of the day, for a unanimous agreement. We will continue to do everything possible to advance matters during the remainder of our Presidency, because of the importance of tax approximation for the completion of the internal market.
Time is running out for Priority Questions and Deputy Taylor has a question tabled. I should like to ask Deputy Noonan to bear that in mind.
(Limerick East): I should like to ask the Minister if the Government have a policy position on tax harmonisation, especially on VAT and excise duty, against which they measure proposals put forward by the Commission. If they have such a policy position, will the Minister outline it for us?
Of course we have a policy position on the whole complex area of VAT but, as the Deputy will appreciate, it would not be a good tactical move to declare our hand in the middle of negotiations. Those negotiations will be complex. The problem at Council level is that until the total package of proposals by the Commission is available there will be very little movement in certain areas. I am referring to the package dealing with excise duties, the control of VAT and tavellers' allowances. Council members want the full package on the table before they are prepared to move on any specific front.
(Limerick East): Is the Minister aware of speeches by Commissioner Schrivener, who is responsible for tax approximation, on the possibility of implementing a minimum rate of corporation profits tax? What is the status of that proposal? Does it amount to a kite being flown by the Commission or is it a proposal going through the Commission?
It was mentioned in the last week or two but it has not got any further than that.