European Finance Ministers will meet on Tuesday 12 February for an Ecofin Council with a particularly limited legislative agenda. They will reach a political agreement ('general approach') on the overall reform of the structure of the European system of financial supervision and will address several budgetary issues before conducting a closed door discussion on a hypothetical switch to qualified majority voting in the EU Council on tax matters.
AES. Ministers are expected to adopt a general approach on the reform of the three European financial supervisory authorities (see ESA - EUROPE 11864). Negotiations with the European Parliament will therefore take place on the entire reform, not solely on the "anti-money laundering" aspect, as envisaged by the Ecofin Council in December (see EUROPE 12177).
No surprises are expected, as the Member States' ambassadors to the EU (Coreper) endorsed an in principle political agreement on the reform on Wednesday 6 February, the main elements of which EUROPE has already described (see EUROPE 12188).
The final text, however, was disappointing. France, particularly, regrets that it does not "live up to its initial ambitions", a diplomatic source said on Friday 8 February.
The Netherlands, for its part, annexed a statement to the final compromise, regretting that it did not fully address concerns about a possible conflict of interest between the European Systemic Risk Board (ESRB) and the European Central Bank (ECB). The country hopes that this governance issue can be discussed in more detail during negotiations with the European Parliament, which will begin on Thursday 14 February.
BUDGET The Council will adopt conclusions on the Commission's report on the sustainability of public finances, published on 18 January 2019. It will also adopt a recommendation the Commission be granted a discharge for the implementation of the EU’s 2017 budget and its budgetary guidelines for the 2020 EU budget (see other news).
ECB The Council is also expected to issue a recommendation to the European Council concerning the appointment of Philip Lane, the current Governor of the Irish Central Bank, as a member of the Executive Board of the European Central Bank (ECB) on the basis of the outcome of the discussion occurring the day before at the Eurogroup (see EUROPE 12189),.
QMV. Ministers will then conduct an initial discussion on the Commission's communication on a gradual lifting of the unanimous vote on tax issues (see EUROPE 12172).
The exchange of views, which will take place behind closed doors, is already subject to much speculation. On Friday, some sources were wondering about the content of the discussion or if the ministers would or would not even speak, or if only the Commission would speak.
Outcry from the Nordic and Central European countries is already foreseeable, a diplomatic source said. As we know, France is clearly in favour of this, while Ireland sees neither the need nor the merits of such a change. Germany's position could be crucial, according to this source.
Preliminary discussions have already taken place in the working group and at Coreper. In addition, some Member States believe that the timing of the Commission's communication is not really appropriate given the upcoming European elections. Other countries are open to considering at least the first step of the Commission's roadmap.
While it is clear to some that the initiative has no chance of success, for the Romanian Presidency of the Council it is already a matter of testing the waters and identifying the areas where Member States would at least be ready to discuss it, bearing in mind that any final decision will have to be taken by the European Council unanimously after consultation of the national parliaments and approval by the European Parliament.
Aviation taxation. Carbon pricing and aviation taxation were added to the agenda at the request of the Netherlands. The Dutch Minister will present a document advocating a coordinated European approach to this issue to his colleagues.
The Netherlands is considering reintroducing a national tax on airline tickets from 2021 and, at the same time, wants to stimulate an EU-level initiative for the next European Commission.
Germany, France, Italy, Sweden, the United Kingdom and Austria already have an aviation tax. Other countries, such as Denmark and Ireland, have experienced this in the past. However, in July 2012, the Commission considered that the Irish aviation tax, in the way it was conceived, constituted State aid that is incompatible with the internal market.
"A coordinated European approach could prevent a shift in air passengers to neighbouring countries, avoid the accumulation of regulations and administrative burdens for airlines and counter the fragmentation and disruption of the internal markets", the Dutch document states.
The document also suggests, for example, moving through the EU Emissions Trading Scheme or considering a tax on kerosene, a tax on air passengers ('ticket tax') or a tax per flight. However, it states that this type of tax should not become an EU specific resource.
The Dutch Minister will also present his initiative to organise an international conference on 20-21 June to discuss ways to strengthen cooperation at the EU level on carbon pricing in the aviation sector.
The Netherlands would also like a discussion on this subject to be included on the agenda of the March Ecofin Council.
Digital taxation will be deferred until Ecofin in March
Digital taxation will not be on the agenda of the ministerial meeting on Tuesday, but will be discussed in March.
Since December, several technical discussions have been held on the very watered-down Franco-German proposal for digital taxation, which would only apply to online advertising (see EUROPE 12152).
According to a diplomatic source, many countries would nevertheless remain sceptical about the very low revenue that such a tax could generate.
Other developments have taken place in parallel. At the end of January, the OECD announced that it had made significant progress on the issue at the international level (see EUROPE 12183), while several countries, such as France, Italy, Spain and Austria, have introduced national measures to tax digital services or have announced their intention to do so.
Thus, the introduction of an interim tax on digital services at the EU level seems to be losing its attractiveness, the same source said. For her, the tone of the March discussion may be very different from previous discussions.
France, on the other hand, is not giving up. After his visit to Sweden, French Minister Bruno Le Maire will meet his Irish counterpart on Monday, and will travel to Ireland on 26 February to try to convince this reluctant country again. (Original version in French by Marion Fontana and Mathieu Bion)