Brussels, 03/12/2009 (Agence Europe) - The ECOFIN Council failed on Wednesday 2 December, to come to unanimous agreement on the treatment of postal services with regard to value added tax (VAT) (see EUROPE 10027). “We will not take any decisions” in the conclusions to be adopted but “we will say that we need further discussion,” said Swedish Finance Minister Anders Borg during the public debate on taxation matter, that is now essential since the Lisbon Treaty came into effect. These conclusions stress “the importance of taking all necessary measures to solve the political problems originating from the VAT treatment of postal services before the third Postal Directive will enter into force and the liberalisation of the postal market is a fact”. This text was described by one diplomat as “odourless, colourless and tasteless”. A progress report on this issue, which will be handed on to the incoming Spanish and Belgian Presidencies, is expected at the end of 2010.
During the public debate, the European Commission firmly opposed the Swedish Presidency's final compromise proposal which recommended exemption for postal services that were part of the universal service, with member states having the option of taxing these services. “Exemption (from VAT) applying to the sector, which stems from the time of state monopolies, is, in the view of the European Commission, no longer justified. In particular, in the perspective of a fully liberalised postal market by the end of 2010, with both private and public operators, many of them operating in more than one country … the current exemption creates distortions of competition, inefficiencies and, in the end, welfare loss,” said European Taxation Commissioner László Kováks. He suggested that the “best solution” would be to approve the Commission's initial proposal which got rid of VAT exemption for postal services and suggested reduced rates for certain basic services. According to Finland, which taxes postal services, member states will, in future, need increased tax revenue to ease budgetary difficulties. “I would kindly ask you to keep your hands off my tax revenues,” the Finnish finance minister said. (M.B./transl.rt)