Little headway seen at EU finmin meet on taxes, G7
10:38 a.m. Nov 30, 1998 Eastern
BRUSSELS, Nov 30 (Reuters) - Talks between European Finance
Ministers set for Tuesday over the future of the EU's huge annual
budget and how the euro zone should be represented at G7 meetings
will likely make little headway, officials said on Monday.
Both issues are set to top the agenda at next month's EU summit in
Vienna. But officials said the best that could be hoped for at the
Brussels meeting was a narrowing of positions on the issues which have
completely divided EU countries.
''We will not I think reach conclusions or decisions tomorrow,'' one EU
official said, when asked to comment on the likelihood of an agreement
on euro zone representation.
Officials said EU countries were still split over whether the European
Commission should get a seat at G7 meetings, and whether national
central banks should lose their places.
''Germany hates the idea, so what are the chances of a result which
Germany cannot live with?'' said one official. France has suggested
national central bank governors stop taking part in G7 talks.
Talks over the EU's 85 billion Ecu ($100 billion) budget for 2000-2006
are also expected to run into the sand.
Eight countries want to freeze expenditure as it prepares to take in new
members from eastern Europe. Others -- Spain, Ireland, Greece and
Portugal -- fear this will lead to cutbacks in the transfers they receive
from Brussels.
In a debate on fiscal matters, ministers are due to give a green light to
opening high-level talks with the United States, Japan, Switzerland and
other countries about an EU plan to clamp down on tax evasion by EU
residents.
The plan calls for EU countries either to introduce a 20 percent
withholding tax on non-residents' savings, or cooperate with other tax
authorities in monitoring income on investments.
Many EU countries fear savings will flow out of the EU if it goes ahead
unilaterally with the plan, just as the United States created an offshore
dollar market in the 1960s with the introduction of a similar withholding
tax.
Officials said the decision to address this concern hid lack of progress in
other areas, such as whether the proposed directive should cover
Eurobonds, which Britain and Luxembourg both object to, and whether
the proposed 20 percent rate was too high. Ministers are not expected
to tackle either of these issues until lower-level experts have finished
preparatory work.
The European Commission wants ministers to reaffirm a commitment
they gave at a meeting in Vienna in September to reach a political
agreement on the savings tax by June 1999.
They also want the deadline extended to a separate work on combating
countries' ''harmful'' corporate tax regimes, on which ministers are due
to receive a progress report.
British Finance Minister Gordon Brown has threatened to veto any tax
agreement which could harm Britain's interests, although the Financial
Times reported on Monday that others in the British government were
unhappy with his stance.
Tuesday's meeting of all 15 EU finance ministers will be preceded by a
Euro-11 group meeting of nations taking part in economic and monetary
union.
European monetary affairs commissioner Yves-Thibault de Silguy will
use the meeting to remind ministers of their commitment to submit
long-term budget forecasts to the EU before the end of 1998.
So far only two EMU countries - Finland and the Netherlands - have
met the deadline, set to give the European Central Bank an overview of
the budgetary prospects of the euro zone before it takes over
responsibility for monetary policy in January.
The Dutch ''stability programme'' is due to be endorsed at Tuesday's
EU finance ministers meeting, which coincides with a meeting of the
ECB's policy-making council in Frankfurt.
((brussels.newsroom+reuters.com, tel +322 287 6830))
Copyright 1998 Reuters |
