8 October: Ecofin

Date: 14/10/1999

EU FINANCE ministers admitted that the chances of an agreement on a slate of tax policy reforms in time for the Helsinki summit in December were growing increasingly slim. “We need a large step forward if we want to reach a decision on that occasion,” Finland's Sauli Niinistö told reporters. He added that a special meeting of ministers and technical officials would be held before the next meeting of finance ministers on 8 November to discuss the issue in greater depth.

THE divisions over savings tax remain the biggest stumbling block to a deal on an overall tax package, which includes moves to eliminate unfair tax breaks for EU business, an EU energy tax and a common approach to levies on cross-border payments between linked companies. Other member states indicated that they could accept the UK's call for existing eurobonds to be exempted from the tax, but described other British proposals as politically unacceptable.

MINISTERS finally reached agreement, however, on a deal which will allow member states to ease the value added tax burden on certain labour intensive services, starting on 1 January next year. The measure will enable governments to apply a reduced VAT rate on two or three categories of services for three years to encourage the creation of jobs and discourage undeclared work. The services involved include small bike repairs, footwear, leather articles, clothing and household linens; renovations and repairs to private housing; window washing and cleaning of private homes; home health care and hairdressing. Portugal was also given the right to continue charging restaurants a reduced VAT rate despite initial opposition from German Minister Hans Eichel.