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Europe Daily Bulletin No. 8605
Contents Publication in full By article 12 / 38
GENERAL NEWS / (eu) eu/european council/taxation

Finance Ministers call on Commission to extend current reduced VAT system

Brussels, 12/12/2003 (Agence Europe) - EU Finance Ministers unanimously called on the European Commission during its lunch on the fringe of Friday's European Council to extend by two years the current reduced VAT rate for high labour intensive services, which expires end December. This delay would make it possible to pursue discussion on new proposals for harmonising reduced VAT rates, still opposed by France and Germany. Commissioner Frits Bolkestein immediately refused to make a proposal with a view to prolonging the current system, while pointing out that the Commission would abstain from opening infringement procedure during six months. Mr Bolkestein had repeated on Monday before the European Parliament's Committee on Economic Affairs that, according to Commission analyses, the experiment of reduced rates on high labour intensive services had been "a failure". "Assessment reports were very disappointing, both in terms of job creation and for reduction of undeclared work", he said. The experience, which was to last three years, was already extended by one extra year and now "one should not contemplate extending the system still further and making permanent a system that was supposed to be temporary", Mr Bolkestein said.

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