Opinion of the European Economic and Social Committee on the Proposal for a Council Directive amending Directive 77/388/EEC on the common system of value added tax, with regard to the length of time during which the minimum standard rate is to be applied (COM(2005) 136 final — 2005/0051 (CNS))
Date: 2005-07-14
Institutions: European Economic and Social Committee
Subjects: VAT, deepening of the European Union, fiscal policy, provision of services, tax harmonisation

C 294/54

EN

Official Journal of the European Union

25.11.2005

Opinion of the European Economic and Social Committee on the Proposal for a Council Directive
amending Directive 77/388/EEC on the common system of value added tax, with regard to the
length of time during which the minimum standard rate is to be applied

(COM(2005) 136 final — 2005/0051 (CNS))

(2005/C 294/10)

On 27 April 2005 the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the abovementioned 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 22 June 2005. The rapporteur
was Mr Burani.

At its 419th plenary session, held on 13-14 July 2005 (meeting of 14 July), the European Economic and
Social Committee adopted the following opinion by 91 votes, nem. con. with 2 abstentions.

1. Background

1.1
Pursuant to the second subparagraph of Article 12(3)(a)
of Directive 77/388/EEC, the Council, on a proposal from the
Commission and having consulted the European Parliament
and the European Economic and Social Committee, unani-
mously sets the level of the standard rate of VAT. In January
1993, the Commission presented some proposals for creating a
regime of definitive tax harmonisation, but the Council was
not able to adopt them as the required unanimity could not be
achieved.

Instead, agreement was reached on approximation of
1.2
rates, with Directive 92/77/EEC setting a minimum rate of
15 %; the expiry date of that decision, originally set for 31
December 1996, was extended three times; the next expiry
date is 31 December 2005.

2. The Commission proposal

2.1
the
In view of the rapidly approaching expiry date,
Commission has presented a proposal to extend the existing
directive until 31 December 2010. The current provisions
remain unchanged: the standard rate cannot be lower than
15 % and the taxable amount is the same for the supply of
goods as for the provision of services.

3. The Committee's views

3.1
Given the current situation of Member States' fiscal poli-
cies, particularly with regard to VAT, the Committee can only
agree with the Commission's initiative, which is in practice a
proper response to the circumstances.

Brussels, 14 July 2005.

3.2
The Committee would nonetheless like to take the
opportunity to make some additional comments, in the hope
that these will receive the attention of Member States.

The lack of unity of purpose of the Member States in
3.3
the area of taxation, and of VAT in particular,
is certainly
nothing new: this has been the case since the European Union
was founded, and the successive enlargements from the original
six countries to the current 25 has served only to widen the
divergence. Over the years, agreement has not even been
reached on the Commission proposal for a range of minimum
and maximum tax rates of 15 to 25 % (even if this is the range
that exists in practice); an agreement on the uniform applica-
tion of the principle of payment of VAT in the country of
origin has proved even more elusive, and the argument for
abolishing the numerous exemptions and derogations given to
each Member State from time to time for various reasons and
with expiry dates — where specified — that are hardly ever
respected, has never been properly tackled.

3.4
Given this background, talking about a ‘transitional
system’ for VAT when referring to a system that has been in
that
place for decades whilst awaiting a ‘definitive system’
appears as problematic as ever, is a mystification that the
EESC is no longer prepared to accept. The Council should state,
for the sake of that transparency vis-à-vis citizens that it keeps
talking about, that it will continue to pursue the strategic
objective of VAT harmonisation, whilst accepting that this is
not realistically achievable in the short to medium term. This
will avoid wasting energy and resources on a futile attempt to
achieve unanimity in areas that are of fundamental importance
to the fiscal and social policies of each Member State, and
which each of them therefore intends to maintain without
concessions.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND