Brussels, 14/09/2001 (Agence Europe) - On Thursday, with the adoption by a slim majority (19 to 16), of the report by Karla Peijs (Dutch Christian Democrat), thus approving the "general tone" of the European Commission communication on the contribution of public funding to growth and employment, the EP's Committee on Economic and Monetary Affairs mainly reminds the large Member States that their budgetary consolidation process is not complete and that the attempts aimed at making budgetary policy more flexible could compromise the international credibility of the euro zone. More generally speaking, it is requested of Member States that they respect the Stability and Growth Pacts updated by the Council in February/March (see EUROPE of 1 March). The rapporteur points out to governments that even a temporary loosening of budgetary policy may compromise all the previous attempts at budgetary adjustment and reminds them that automatic stabilisers can only work appropriately when the fiscal situation of the country is sustainable.
The report (to be debated in plenary on 8 October) considers that public investments "are liable to be ill-targeted and ill-managed" and that any increase in such investments "is likely to result in higher public debt and a higher tax burden". It also affirms that the policies followed should give priority to the objective of "making work pay". Thus, a reduction in labour taxes should target the lower end of the labour market and provide incentives to go back to work. The report supports the coordination of European tax systems and the introduction of an environmental component in taxes.