1-2 February Industry informal

Date: 06/02/1997

THE total harmonisation of Europe's 15 national tax systems would not be desirable, Internal Market Commissioner Mario Monti told ministers. He noted that personal income tax levels were, for example, a classic area where the principle of subsidiarity - which decrees that decisions should be taken at the most devolved level possible - should apply. Monti said differences between member states' tax regimes did not damage the internal market, adding: “It would not only be highly unrealistic but also, in my view, totally undesirable [to harmonise regimes].” But the Commissioner insisted that value added tax was, on the other hand, a prime candidate for harmonisation. He said a situation where VAT systems were overly complex and varied from member state to member state could seriously damage the single market. Taxation proposals will be included in the Commission's action plan on completing the internal market which is due to be presented to the next summit of Union leaders in Amsterdam in June.

INCREASING the EU's competitiveness in relation to economic rivals such as the United States and Japan is of paramount importance if Europe is not to lag behind competitors on the world economic stage, ministers agreed. “There was complete agreement among industry ministers that we should work much more systematically on the issue of European competitiveness; that we should focus more on the high-growth areas,” said Dutch Economic Affairs Minister Hans Wijers. European Commission data show that the Union has only managed to create 10 million new jobs since the 1960s. That works out at less than one-fifth of what the United States has achieved over the same period. The result is that Europe's average unemployment rate currently reaches 11&percent;, while the official jobless level in the US stands at 5.5&percent; - half the EU figure.

A STUDY carried out by independent experts and presented to ministers claimed the Union was particularly failing to take on competitors in crucial growth sectors such as information and communication technology (ICT). The report called for dramatically accelerated reform to help boost Europe's information technology industries, which are seen as key players in any job creation strategy. “On the whole, the European ICT industries lag behind competitors in most sectors in the US and to a lesser extent in Asia,” said one ICT expert.

THE advent of stage three of economic and monetary union - due to come into force on 1 January 1999 - will provide a much needed boost to Europe's competitivity, Industry Commissioner Martin Bangemann predicted. As more and more member states adopt the euro, it is hoped that the Union's businesses will progressively be able to phase out the costly practice of operating in several different currencies. This should enable them to cut costs and consequently be in a better position to compete with their rivals.