Ministers to discuss tax and global reforms

Finance ministers will focus on tax evasion and global reform measures.

EU finance ministers will meet in Luxembourg on Monday (19 October) for talks focused on taxes on financial institutions, tax evasion and global reform measures.

The ministers will discuss options for taxes on the financial sector in preparation for a summit of EU leaders on 28-29 October.

With the cost of propping up banks during the financial crisis weighing heavily on public finances, most EU governments want to find ways to make the financial sector shoulder part of the cost.

Some member states favour a tax on financial transactions, but the European Commission said last week that a tax would be difficult to implement at a global level. The Commission favours introducing a financial-activities tax within the EU.

The issue of co-ordination of the different national levies and other measures imposed on the financial sector since the start of the financial crisis is expected to be a central element of discussions.

The European Banking Federation (EBF) said on Monday (11 October) that it was “seriously concerned” at the “multiplication of measures” on the financial sector.

Guido Ravoet, EBF’s secretary-general, said ideas were being put forward “without apparent co-ordination” and with little concern for their impact on the competitiveness of European banks internationally.

IMF seats

Reform of the global financial regulatory system will feature as part of discussions on the common positions that the EU should adopt at a meeting of G20 finance ministers in Gyeongju, South Korea, on 22-23 October. Talks in Gyeongju will also address reform of the governance of the International Monetary Fund. The EU has offered to give up two seats on the IMF’s board.

The meeting of EU finance ministers in Luxembourg is expected to produce agreements on several tax-related issues.

Ministers are likely to strengthen co-operation between member states to curb evasion of taxes on savings, approving changes that seek to improve the exchange of information between national tax authorities.

Ministers need to decide the conditions under which information can be exchanged automatically and the rules for ‘fishing expeditions’ by authorities seeking supplementary information. The changes need to be agreed unanimously.

The Council is also expected to authorise four member states (Germany, Italy, Austria and the UK) to make temporary changes to VAT legislation in order to tackle ‘carousel fraud’, in which goods are traded repeatedly without tax being paid to the authorities. The change involves ‘reverse charging’ – obliging the end customer, rather than the supplier, to pay VAT.

Budgets

Ministers will probably endorse a Commission opinion that Lithuania and Romania are taking adequate action to reduce their budget deficits to below 3% of gross domestic product by 2012.

Separately, ministers from the 16 eurozone member countries will meet on 18 October to discuss plans to strengthen budgetary discipline. These plans are also being discussed in a meeting of a special taskforce chaired by Herman Van Rompuy, the president of the European Council (see Page 2).

Click Here: Cheap France Rugby Jersey