Brussels, 30/04/2009 (Agence Europe) - European finance ministers will meet in Brussels on Tuesday 5 May to take stock of the economic situation in the European Union and in the euro area in the light of the most recent data available since their informal meeting in Prague at the start of April (see EUROPE 9877 and 9876). They will try to reach agreement on the draft directive revising the duty on tobacco products (see EUROPE 9705).
The Eurogroup will meet the previous evening. In the light of the spring economic forecasts which Economic and Monetary Affairs Commissioner Joaquin Almunia will present earlier in the day, the Eurogroup will discuss the economic situation in the euro area. Its President Jean-Claude Juncker will also brief the other group members on the outcomes of the Washington meetings at which several countries challenged the pessimistic assessment of the International Monetary Fund (IMF) of how much the crisis will cost banks (almost $1,200 billion). Euro area finance ministers will also discuss the follow-up to their informal meeting in Prague with examination of the budgetary austerity measures taken by Ireland in response to its public deficit which could go above 10% this year. Lastly, they will discuss more specifically the performance of the services sector in the euro area.
Excise duty on tobacco. “The Presidency has put in a huge effort” in negotiations in Council on the legislative proposal reviewing excise duties on tobacco products and “we hope that a political agreement will be reached on Tuesday, although this will be difficult,” a Czech diplomat said. The compromise on the table proposes: - setting a monetary minimum excise rate of €90 per 1000 cigarettes and a proportional minimum of 60% of the weighted average sales price from January 2014; - introducing a transitional period for member states which have not yet, or have only recently, achieved current minimum rates; - increasing the minimum excise duty requirements for fine-cut tobacco. According to a Czech Presidency note, two alternative solutions are under consideration for increasing the excise duty on cigarettes. Some member states feel that the suggested rates are too high, although the Commission has proposed the same monetary excise rate of €90 and a proportional minimum of 63% of the weighted average sales price. Other countries are against the transitional periods which they feel are too short or are against “quantitative restrictions” related to setting the deadlines for falling into line with the future rules.
VAT. Ministers will formally adopt two legislative proposals transcribing the political agreement reached at the start of March on reduced value added tax (VAT) reductions (see EUROPE 9858). The first will make permanent the application of a reduced rate of tax to certain labour intensive local services (for example, minor bicycle repairs, hairdressing, personal care), will authorise reduced rates for restaurant services and books, no matter their format, and will approve the specific requests of Cyprus, Malta and Portugal. The United Kingdom will be allowed to continue to apply the reverse charge procedure on deliveries of mobile telephones of £5,000 and above.
Still in the area of taxation, the Commission will present its recent proposals on the promotion of good governance in tax matters within the EU and in EU relations with third countries (see EUROPE 9891). “The intention is simply to listen” to the Commission; there will be no debate because of the lack of preparation time, another Czech diplomat revealed. The issue will be put on the agenda of the June Ecofin Council which will take stock of the taxation of savings income.
Responding to a request from the European Council, finance ministers are expected to unanimously approve the Commission proposal to raise the ceiling of the mechanism to provide assistance for balances of payments of non-euro area member states (see EUROPE 9879). The amount available under this facility will rise from the current €25 billion to €50 billion, the European Parliament having been consulted and supporting the change in regulation 33/2002 (see EUROPE 9890). On the basis of two Commission communications, the Council will adopt conclusions assessing the two latest EU enlargements and restating the importance of sustainable, high quality public finances (see related articles). The Commission will present its preliminary draft budget for 2010 as adopted on Wednesday 29 April (see EUROPE 9892). First reading discussion on the draft budget will take place at the Ecofin Council of 10 July.
The Czech Presidency will take stock of four issues in the area of financial services on which the EP has already voted in first reading: - the regulation on credit rating agencies and the “Solvency II” directive on the activities of European insurance companies (see EUROPE 9887); - two legislative acts on electronic payment. (A.B./M.B./transl.rt)