Director-general sacked over ‘irreconcilable differences’

Date: 02/11/1995

By Tim Jones

THE European Union's highly-complex system for harmonising indirect taxation this week claimed the scalp of the leading Commission official mandated to oversee it.

At this week's meeting of the Commission, Internal Market Commissioner Mario Monti won the backing of his colleagues for the dismissal of his director-general for customs and indirect taxation.

Peter Wilmott, a 48-year-old Briton, was removed from his post because of “irreconcilable differences” with Monti.

“It would be inappropriate for me at the moment to enter into the fundamental reasons that led me to propose this decision to the Commission,” said Monti, in announcing the dismissal.

Monti cited his “responsibility to see that the Commission services do their part to complete the single market as effectively as possible”, implying Wilmott had been foot-dragging in his duties.

It was obvious for months that all was not well in DGXXI since new proposals for creating a definitive regime for value-added tax had still to be drawn up.

“Just look at the VAT system,” says one tax specialist. “Everything has to change in January 1997 and we still have no proposal from the Commission. There is no way they will meet the deadline.”

After many years of negotiations, member states agreed to set up a transitional regime for VAT, whereby businesses would continue to pay tax in the country where the goods are consumed.

Tentative Commission plans envisage that, under the definitive regime, VAT would be charged in the country where the goods originate. But, since this would discriminate in favour of exporting countries, the Commission would set up a clearing system to reallocate tax revenues as though the old home-consumption system applied.

Needless to say, this will be complicated and Monti believed insufficient work had been done on the impact of the reform. Wilmott's reluctance to draft a detailed impact analysis within a tight deadline was the catalyst for his sacking.

However, Wilmott's supporters claim he is being made the scapegoat for the failure of Monti to come up with a VAT reform proposal and champion it through the Commission and the Council of Ministers.

The Commissioner's natural unwillingness to fight his corner is supported, they claim, by his overprotective Chef de Cabinet Enzo Moavero Milanesi, who allegedly makes access to Monti all but impossible even for senior Commission staff.

With Wilmott out, the UK government will want at least an equivalent post within the Commission, although it may be hard-pressed to find even an ambitious official willing to fill his shoes at DGXXI.