I thank the Chairman and committee members for inviting me to speak to them today in advance of the ECOFIN Council of Ministers meeting on Friday, 7 November in Brussels. As the committee knows, we have agreed, subject to scheduling arrangements, that I attend this committee regularly to update it and discuss developments occurring at the ECOFIN Council. The departmental officials also provide written briefings each month to the committee. I see this as a positive opportunity to engage and discuss the issues before finance Ministers across the EU.
This is the second last ECOFIN Council under the Italian Presidency, with Latvia taking over the Presidency from 1 January 2015. Much has been achieved and progressed under the Italian Presidency and I am confident that much will be achieved by the Latvian Presidency next year. The new Commission took office on 1 November and this marks an opportunity for renewed drive and commitment to work even harder on restoring our economies, getting our young people back to work and creating a better society for all. There are many challenges ahead for the new Commission and Ireland will work steadfastly in assisting its work.
In its invitation, the committee asked if I would also provide a brief overview of the proceedings of the October meeting so I will address that item first. That meeting took place in Luxembourg on 14 October. As members recall, 14 October was also budget day here in Ireland and because I was presenting the budget to the Dáil, I was unable to attend the ECOFIN meeting. In my absence, I was ably represented by His Excellency Ambassador Declan Kelleher. The ECOFIN agenda was dominated by two main areas: supports for investment and taxation.
Turning first to investment, the Commission and the European Investment Bank, EIB, presented a joint note on promoting investment. This follows on from the informal ECOFIN meeting in September, when a task force was established. This task force will allow member states, the Commission and the EIB jointly identify viable investments of European significance that are not being realised currently for economic, regulatory or other reasons. It is intended that the task force will deliver its final report by the end of December. The October Council discussed measures to support investment as part of the EU's response in promoting competitiveness and growth, and Council conclusions were agreed and published after the meeting.
Looking forward, I am confident there will be opportunities for investment in Ireland arising out of this task force, and the Department is engaging actively with it to ensure this is the case. Ireland's engagement with the EIB is very positive and funding for Ireland has increased steadily in recent years. The positive engagement between Ireland and the bank was aptly demonstrated last Friday when President Werner Hoyer of the EIB travelled to Ireland, along with Minister Schäuble and Kreditanstalt für Wiederaufbau, KfW, bank, to sign the loan for the Strategic Banking Corporation of Ireland, SBCI. The EIB and Ireland are strongly committed to working together to enhance the bank's activity in the country, and this commitment is clearly beginning to bear fruit.
There was also a brief discussion on a presentation by the Commission on the importance of research and innovation as sources of renewed growth. The Commission outlined proposals on how to better exploit the potential of research and innovation as drivers of economic growth. The discussion will continue at the Competitiveness Council in December where it is hoped to adopt conclusions. Ireland fully supports the proposals of the Commission and recognises its importance to growth in the economy.
There was also an item on the agenda relating to banking union and the contribution to the single resolution fund. The Commission updated the Council on the preparations for implementing legislation on contributions by banks to resolution funds established under new EU rules. Banks will have to make annual contributions to resolution funds established under the bank recovery and resolution directive and under the regulation on the single resolution mechanism. Contributions will be calculated on the basis of the banks' liabilities, excluding own funds and covered deposits, and adjusted for risk. Work on this area has largely been completed.
In respect of taxation, the Council agreed to a draft directive extending the mandatory automatic exchange of information between tax administrations, thereby enabling them to better combat tax evasion and to improve the efficiency of tax collection.
The proposal brings interest, dividends and other income, as well as account balances and sales proceeds from financial assets, within the scope of the automatic exchange of information. It thus amends the directive on administrative co-operation in the field of direct taxation. It is aimed at remedying situations where a taxpayer seeks to hide capital or assets on which tax is due. Unreported and untaxed income is considerably reducing potential national tax revenues, and cross-border tax fraud and tax evasion have become a major focus of concern both within the EU and at global level. The automatic exchange of information is an important means for strengthening the efficiency and effectiveness of tax collection, and the new directive thereby sets out to meet that challenge.
Only last week I travelled to Berlin and signed the multilateral competent authority agreement, which demonstrates Ireland's firm commitment to automatic exchange of information. It is another example of how Ireland supports the automatic exchange of information between tax authorities as an important tool in the fight against tax fraud and evasion and we look forward to its implementation at EU and global level.
Finally, in respect of energy taxation, the Council debated a proposal to restructure the taxation of energy products and electricity in line with EU policy objectives regarding energy and climate change. The Commission's proposal amends the existing energy taxation directive in order to promote energy efficiency and the consumption of more environmentally friendly products. Noting the divergent positions of member states on the key issues covered by the proposal, it was decided to return to the issue again at another meeting.
I hope the committee found that brief overview of last month's meeting helpful. I will now turn to the November ECOFIN, which will take place on Friday. I will be happy to take questions and observations from members after I have outlined the key issues that are likely to arise at Friday's meeting. The agenda that has been issued is still very much a draft and there can be changes between now and the meeting in respect of content and the order of the discussion. As always, work is continuing at the level of officials and, therefore, there can also be more substantial changes in how the discussions will evolve.
The agenda in its current format will begin by considering an item on the revision of VAT and GNI own resources balances 1995 to 2013. This item relates to the EU budget and flows from a draft amending budget tabled by the Commission on 17 October, which mainly provides for an adjustment of member states' EU budget contributions on foot of the annual technical rebalancing payments in respect of macro-economic, VAT and customs duty revisions undertaken for all member states. These rebalancing payments are called up automatically every year on 1 December in accordance with EU own resource legislation. It is anticipated that a general discussion will take place with the Commission taking the lead. While recognising that all member states are expected to abide by the budgetary rules in addressing any immediate political issue, we will be constructive in working with colleagues to seek a pragmatic solution that could be accommodated within the own resource legal framework.
The agenda will then move onto the "legislative deliberations", which will take place in public session. Based on the draft agenda, three items are scheduled for discussion, all of which are related to taxation - the parent subsidiaries directive, the financial transaction tax, FTT, and the standard VAT return. The parent subsidiaries directive was introduced to avoid double taxation of certain companies in the Single Market. At Friday's meeting, Ministers will aim to reach a political agreement on the basis of an overall Presidency compromise text for a common minimum anti-abuse provision, which will be examined and discussed thoroughly.
On the issue of the FTT, Ministers will be provided with an update by the Commission on the state of play with regard to the work on the tax. In 2013, some 11 member states agreed to work towards the introduction of such a tax through enhanced co-operation. The ECOFIN last discussed this issue in May this year, when ten of the Ministers issued a joint statement reaffirming their commitment to introducing the tax and committed to reaching agreement by the end of the year on the initial application phase of the FTT by 1 January 2016. The Presidency took note of this joint statement by the Ministers of the ten participating countries and confirmed that all relevant issues would continue to be examined by national experts. It noted the intention of participating countries to work on a progressive implementation of the tax, focusing initially on the taxation of shares and certain derivatives. However, progress to date by the participating member states has been slow and there are still many open issues around the scope of the tax and the distribution of revenues among member states.
The VAT proposal aims to introduce a standard VAT return throughout the EU with the aim of reducing burdens on business. The current VAT directive has been identified as burdensome for SMEs. This proposal was last discussed by Ministers at the Slovenia November meeting last year. At Friday's ECOFIN, Ministers will be invited to give their views on the future handling of the proposal and to agree a draft set of conclusions. However, progress has been slower than hoped since last November, and questions are being raised as to whether the costs involved may outweigh the benefits. We will discuss these issues at the meeting and, hopefully, make headway. In general, I am strongly supportive of the concept of measures that make life easier for business. However, like many other member states, we are mindful of proposals that might not lead to savings and could lead to additional administrative burdens for business and, therefore, we will be keeping a careful watch on how this proposal develops.
I refer to non-legislative activities based on the draft agenda before us. Two items are scheduled for discussion. These are Council conclusions on EU statistics and on the preparation of the 20th conference of Parties to the United Nations Framework Convention on Climate Change, UNFCCC, in Lima. The Council conclusions on EU statistics are a regular item at this time of year and Ministers will be asked to adopt Council conclusions on the annual statistical package. As the work on this item was progressed and prepared by officials, it is not envisaged that a detailed discussion will be required on this issue.
At the meeting, Ministers will be asked to adopt Council conclusions on climate finance ahead of the UNFCCC conference in Lima in December. The Council will consider a set of draft conclusions which reflect the common EU position for the Lima discussions. The conclusions outline the parameters of the EU's engagement in international climate finance. Work is under way at international level to develop commonly agreed frameworks for measuring, reporting and verifying climate finance flows. The conclusions have been prepared by officials and, therefore, a long discussion is not expected at ECOFIN.
I hope that the committee has found the brief summary of the outcome of last month's ECOFIN informative and that the outline I have given on this month's agenda gives a good insight into the current issues before the Council. I thank members for their attention and I will be happy to respond to questions or observations that they may have.
