Commission makes case for QMV on tax

Date: 02/03/2000

By Gareth Harding

THE European Commission will next week unveil detailed proposals for extending the use of qualified majority voting (QMV) to some of the most sensitive areas of EU decision-making, such as taxation and social security.

Its recommendations are bound to run into fierce opposition from those Union governments which are fighting hardest to retain their vetoes and argue that extending QMV to taxation would fundamentally erode their national sovereignty.

But a source close to Commission President Romano Prodi insisted that without a major increase in QMV in these fields during this year's Union treaty reform talks, the present "deadlock" over taxation would remain and "anomalies" in member states' social-security rules would continue to frustrate the single market.

The Commission believes that decisions on direct taxation and ways of collecting levies should remain subject to unanimity, but that rules which prevent the proper functioning of the internal market should be decided by majority vote.

These include corporate tax laws, which Intergovernmental Conference Commissioner Michel Barnier believes are riddled with anomalies and lead to tax evasion.

But it is the Union's value added tax system which the Commission believes is in most urgent need of revision.

One official said rules about what goods qualify for lower and higher rates of VAT were "archaic" and must be modernised. Under the Commission's plans, member states would continue to wield the veto when setting basic levels of value added tax, but would surrender it for deciding maximum rates.

Barnier is also likely to support moves to decide energy taxation issues by QMV. Most member states favour this, but Spain - which is implacably opposed to EU-wide levies on coal, oil and nuclear power - is insisting that the unanimity rule must be retained.

In addition, the Commission will argue that more majority voting is needed on social-security legislation. Officials say current cross-border schemes are "unable to cope with people living in one country and working in another" and argue that harmonising rules in this area would avoid many people paying double pensions, taxes and insurance.

Barnier has also unveiled proposals aimed at making the European Court of Justice more efficient in an enlarged Europe.

The Commission's paper leaves open the question of whether each member state should continue to send one judge to Luxembourg, or whether Union leaders should cap the number of judges at 15. However, it contains recommen-dations for speeding up the Court's work by reducing the number of cases it deals with.

The European Commission is to unveil detailed proposals for extending the use of qualified majority voting (QMV) to some of the most senstitive areas of EU decision-making, such as taxation and social security.