Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive amending Council Directive 76/308/EEC on mutual assistance for the recovery of claims resulting from operations forming part of the system of financing the European Agricultural Guidance and Guarantee Fund, and of agricultural levies and customs duties and in respect of value added tax and certain excise duties` () (1999/C 101/08)

On 28 July 1998 the Council decided to consult the Economic and Social Committee, under Article 100a of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 15 December 1998. The rapporteur was Mr Bento Gonçalves.

At its 360th plenary session (meeting of 27 January 1999), the Economic and Social Committee adopted the following opinion by 119 votes to one with four abstentions.

1. Introduction

1.1. Scope of the proposal

The main purpose of the Commission communication and the accompanying proposal is to amend, inter alia, Council Directives 76/308/EEC and 79/1071/EEC in order to improve the procedures for mutual assistance between Member States with regard to the recovery of claims resulting from operations forming part of the system of financing the EAGGF and relating to the following:

- agricultural levies and customs duties

- value added tax (VAT)

- import and export duties

- certain excise duties

- taxes on income and capital

- costs and interest incidental to the recovery of these claims.

1.2. Objective and legal basis

The Commission considers that its proposal is important for safeguarding the normal functioning of the internal market in accordance with Article 7a of the Treaty and for meeting the threat to the financial interests of the Community and the Member States posed by the non-fulfilment of fiscal obligations and the steady rise in fraud. The legal basis is Treaty Article 100a.

2. Gist of the Commission communication and proposal

2.1. The Commission refers to the difficulties encountered in implementing the procedures on mutual assistance between Member States with regard to the recovery of claims. It lists some of these difficulties, the most important of which are:

- the difficulty of tracing debtors in the EU;

- appreciable differences between Member States' recovery powers;

- lack of legal equity in the treatment of inter-Member State claims;

- slow, complicated and poorly understood mutual assistance arrangements;

- no administrative priority given to inter-Member State claims.

2.1.1. These procedures were conceived for the recovery of agricultural levies and customs duties as albeit limited sources of Community revenue. Problems started to arise when essentially national taxes such as VAT and excise duties were included.

2.2. The procedures were introduced in 1976 and have been amended on four occasions. One of these occasions was in 1990, but the 1990 amendments were never adopted and are now being replaced by the present proposal.

2.3. Once again, piecemeal solutions are being proposed in an attempt to achieve the Commission's and Council's objective of making the recovery of claims more efficient.

3. General comments

3.1. The Commission justifies its proposal with the aid of data obtained from a detailed analysis of trends since the 1970s. There are a growing number of signs which suggest that fraudsters are increasingly exploiting shortcomings in the system by perfecting their techniques, thereby continually increasing the volume of fraud. It is also acknowledged that only 3-5 % of debts are recovered from fraudsters.

3.1.1. In addition, cooperation between national administrations in the field of mutual assistance is inefficient or lacking. This means that many claims are forfeited. Others cannot be recovered because the firms owing the money do not have the assets, while firms' short lives also result in a loss of fiscal revenue. The current system is unsustainable because of the tax injustices, distortions of competition and iniquities which it causes between Member States and between businesses.

3.1.1.1. The Commission proposes that excessively old claims should be excluded from the directive's field of application.

The Committee understands the Commission's motives, but considers that this possibility is unacceptable in terms of fiscal justice because it would reward fraudsters while penalizing businessmen who meet their obligations. The tax revenue of some Member States would also suffer at the expense of others.

3.1.1.2. National governments must show greater determination to recover claims more effectively and hence to combat fraud.

3.2. The Commission points out that the recovery of VAT and direct taxation are the main concerns at the moment because of the large sums involved.

3.3. Ways of improving the system

3.3.1. A number of strategies are listed for making the system more effective:

- Integrated strategy for improving the functioning of agreements on the recovery of claims and measures for updating the legal framework and its application.

- Implementation of administrative measures under the FISCALIS programme, especially in relation to VAT and excise duties.

- Continuing vocational training for administrative staff could help to improve the situation. However, there may be legitimate doubts as to the effectiveness of this training, bearing in mind the adverse developments in this field. One may also ask whether it is not more a question at the moment of taking political decisions at the highest level.

3.4. Delay in implementing the definitive VAT regime

- Another legitimate question concerns the reasons behind the failure to set up the regime which was to replace the 1993 transitional VAT regime in the course of 1996.

- The definitive regime, which was scheduled to enter into force in 1996, was based on the principle of assessment in the country of origin, which could be one way of tackling the present problem more adequately.

4. Specific comments

4.1. Article 1

The material which took up twenty-five articles in the previous proposal has now been condensed into four.

The following amendments have been made:

4.1.1. The title of Council Directive 76/308/EEC of 15 March 1976 has been changed to read: 'Council Directive 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of claims relating to certain levies, duties, taxes and other measures`.

4.1.2. The gist of the proposal is as follows:

4.1.2.1. 'Import duties`: the meaning has been widened to include the customs duties of third countries and the agricultural levies and other import charges laid down within the framework of the common agricultural policy or in specific arrangements resulting from the processing of agricultural products (first indent of Article 1(3) of the proposal).

4.1.2.2. Idem in relation to 'export duties` (second indent of Article 1(3) of the proposal).

4.1.2.3. 'Taxes on income and capital` (third indent of Article 1(3) of the proposal).

4.1.3. Point 4(a) extends the information which can be supplied to the applicant Member States to allow them to identify the persons against whom the claims are being made (amendment to Article 4(2) of Directive 76/308/EEC).

4.1.4. Point 4(b) deletes paragraph 3, point (b) of Article 4 of Directive 76/308/EEC, thereby depriving the requested Member State of the possibility of not supplying the applicant authority with information about the debtor which would disclose an industrial, commercial or professional secret (amendment to Article 4(3) of Directive 76/308/EEC).

In the Committee's view, this amendment will not help to improve the combating of fraud. What is needed is a legal framework for eliminating obstacles to the supply of information whenever this is necessary to combat fraud.

4.1.5. The Committee agrees in principle with the amendment in point 6 of the proposal. However, the date of receipt of the applicant authority's request by the requested authority must be respected so that enforcement of the claim is not prejudiced by the requested authority.

4.1.6. The Committee endorses the deletion of Article 14, as proposed in point 12 of the proposal, as this will improve mutual assistance procedures for the recovery of outstanding claims.

4.1.7. The proposed amendments to Articles 22 and 25 (points 15 and 16 of the proposal) seek to improve mutual assistance procedures between Member States and information on the progress of cases, enabling the Commission to provide the Parliament and the Council with details of the results achieved.

4.2. Articles 2 and 3

These articles deal with the laws, regulations and administrative provisions which the Member States will have to adopt in order to comply with the proposed directive and the date of the directive's entry into force. They do not call for any comment on the part of the Committee.

5. Conclusions

5.1. The Committee endorses the proposal as being consistent with the recommendations made in its opinions on general taxation in the EU, which anticipated most of the problems which have arisen in taxation and unresolved fraud cases ().

5.1.1. A whole range of ad hoc and transitional tax measures have served to increase fraud, seriously distorting competition and continuing to benefit some Member States at the expense of others.

5.1.2. Such a trend runs counter to the guidelines and commitments adopted at the time of the launch of the single market, when a transitional system was set up that was to run until 1996. Guidelines were established for preparing the EU's tax framework so that all economic operators and Member States could conduct their business free of red tape and in a climate of transparency and fiscal equity.

5.1.3. The Committee is not convinced that the Commission proposals will suffice to recover fraudulent claims. The Committee considers that the root of the problem lies in the Member States, since all the measures for combating the effects of fraud are bound to fail as long as Member States continue to concentrate on recovering domestic claims. In short, the EU is entering the 21st century with a tax system that would not even have been appropriate in the 19th.

5.2. As the Court of Auditors states in its annual report concerning the financial year 1997 ()

- 'In the Member States the fight against fraud is usually synonymous with an absence of an integrated strategy ...`

- ' The instruments for cooperation between Member States are not fully utilized.`

- 'The slowness of the procedures and, sometimes, even the ignorance of existing instruments, especially at the level of local administrations, frequently provide the explanation for this under-utilization.`

- 'In the absence of a viable alternative, the current "transitional" system will remain in place for several more years.`

In these circumstances, the Committee considers that the problem of fraud can only be resolved by the taking of political decisions at the highest level.

5.3. In view of the above, and more especially:

- the Court of Auditors' comments on the inability of national authorities to tackle fraud effectively, and its steady rise;

- the Court of Auditors' statement concerning the continuation of the transitional fiscal system;

- the EU public's growing recognition of the political incapacity of governments and the Community authorities to address the problem jointly;

- the fact that the single market and monetary union, which have already been established, will only become effective with the establishment of the tax pillar;

national governments must act with determination to eradicate the social, economic and political problems caused by this situation, thereby creating conditions in which EU citizens and economic operators can freely benefit from the EU in conditions of transparency and equity.

Brussels, 27 January 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI

() OJ C 269, 28.8.1998, p. 16.

() OJ C 237, 12.9.1988; OJ C 82, 19.2.1996; OJ C 204, 15.7.1996; OJ C 296, 29.9.1997.

() OJ C 349, 17.11.1998.