COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT pursuant to the second subparagraph of Article 251 (2) of the EC-Treaty concerning the Common position of the Council with a view to adopting a European Parliament and Council Regulation amending Council Regulation (ES) No 2223/96 as concerns the use of ESA95 in the determination of Member States' payments to the VAT-based own resource

1. Background

Proposal submitted to the European Parliament and the Council (COM(2000)583, COD 2000/0241) 20 September 2000.

European Parliament's Opinion (first reading): 3 April 2001.

Adoption of Council common position: 16 July 2001.

2. Purpose of Commission proposal

Regulation 2223/96 introduced the new European System of national and regional Accounts (hereinafter ESA95). That regulation stipulates, however, that ESA95 shall not be used for budgetary and own resource purposes. Instead, the previous ESA79 shall continue to be used so long as the Own Resources Decision (hereinafter ORD) 94/728/EC remains in force.

One of those budgetary purposes is the adjustment of VAT receipts that has to be undertaken when calculating Member States' payments to the VAT-based own resource of the EU budget to take account of the fact that there is no harmonised VAT base, since Member States may fix their own rates of tax and adapt the coverage in terms of goods and services to meet national requirements.

As Member States began to adopt the ESA95 for compiling their regular NA, the situation arose in which ESA79 data were no longer available or could only be made available at unreasonable cost and would anyway be of lower quality. Moreover the Commission services ascertained that the use of ESA95 for this purpose would make no difference to the level of Member States' payments (this is pointed out in the European Parliament's first, acceptable, amendment) and the Commission could make equally valid controls of Member States' VAT declarations using ESA95.

The purpose of the Commission's proposal is simply to amend the relevant provision of Regulation 2223/96 to allow the new, better ESA95 data to be used.

Incidentally, in the meantime a new ORD, 2000/597/EC, has been adopted and enters into force on 1 January 2002 provided the ratification process is completed in time.

3. Comments on the common position

3.1 General

At its first reading the EP proposed three amendments, which are commented on in the Council's Common Position. Amendment 1, which was accepted by the Commission, has been incorporated into the Common Position while amendments 2 and 3 have been accepted neither by the Commission, nor by the Council in its Common Position.

Amendment 2 would introduce an additional recital requiring the Commission to provide an annual report to the Parliament and the Council on the state of play regarding the collection of own resources, the forecasted level of own resources for the next financial year and topical problems related to the own resources system. The Commission agrees in principle with this concept - indeed much of this information is already provided - and the Commission services have already been in contact with the rapporteur, Mrs Jutta Haug, concerning the form, content and timing of such a report. However, like the Council, the Commission considers the present purely technical regulation is not the place to legislate on budgetary matters. Indeed, the legal basis for the present purely statistical proposal is Article 285, for which the co-decision procedure and a qualified majority in Council are foreseen, whereas budgetary legislation is the responsibility of the Council alone and unanimity is required.

Amendment 3 would introduce a third additional recital "Whereas the state of play regarding the collection of own resources and the forecasted level of own resources for the next financial year is to be included on the agenda of the trialoque provided for by the Interinstitutional Agreement of 6 May 1999, Annex III, part B, paragraph 4, 1st sub-paragraph". The Commission is not directly concerned but whatever the arguments for and against, it considers that this would be a major change to the present inter-institutional arrangements regarding the political management of the budget, which for obvious reasons should not be introduced through a purely technical regulation about the use of statistics.

3.2 Decisions on the European Parliament's amendments following the first reading.

3.2.1 Accepted by the Commission and incorporated into the common position

Amendment 1 proposes to introduce an additional recital: "Whereas the use of data based on the new European system of integrated economic accounts (ESA95) for the purpose of determination of the VAT-based own resources has no impact on the level of own resources and their balance between the Member States". The Commission has declared at all relevant Parliament and Council meetings that it accepts this addition, as does the Council in its common position. The Commission has not formally introduced a revised draft of the proposed regulation solely for this addition since it is trivial compared to the other two amendments.

3.2.2 Accepted by the Commission but not incorporated into the common position (the Commission's position)

None.

3.3 New provisions introduced by the Council and the Commission's position.

None.

3.4 Problems of comitology encountered during the adoption of the common position (and the position adopted by the Commission).

None.

4. Conclusion

In conclusion therefore the Commission agrees completely with the Council's common position that accepts the first amendment but does not accept the second and third.