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Preparation of Eurogroup and Economic and Finance Ministers Council, Luxembourg 18 and 19 October 2010

European Commission - MEMO/10/497   15/10/2010

Other available languages: none

MEMO/10/497

Brussels, 18 October 2010

Preparation of Eurogroup and Economic and Finance Ministers Council, Luxembourg 18 and 19 October 2010

EUROGROUP

The Eurogroup meeting will start at 8h30 on Monday 18 October for a discussion focused on economic governance. It will then stop at 11H, when the Task Force Meeting will start, and will resume right after that meeting, later in the afternoon. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn. A press conference is expected to take place after the meeting, on Monday evening.

Economic governance: euro area issues (AAT)

Ministers will discuss euro-area specific issues related to the reform of the EU economic governance (8h30 – 11h)

Financial stability developments in the euro area (AAT)

Ministers will take stock of the latest developments regarding the financial stability of the euro area.

Follow up to Washington meetings and preparation of G20 Finance Ministers' and Governors' meeting on 21-23 October: euro area issues (AAT)

The Eurogroup, as well as the Ecofin the next day, will discuss the preparations of the forthcoming G20 Finance Ministers' meeting to be held on 21-23 October in Gyeongju, Korea, and the G20 Leaders summit in Seoul on 11-12 November. The summit will focus on the global economic outlook and the action plan to be adopted on the G20 Framework for Growth; the governance reform of the International Monetary Fund; the way forward on Global Financial Safety Nets; and financial regulatory reforms.

ECOFIN

The Council of Economic and Finance Ministers will start at 10h30 on Tuesday 19 October. It will be attended by Commissioner for Economic and Monetary Affairs, Olli Rehn, Commissioner for Internal Market and Services, Michel Barnier, and Commissioner for Taxation and Customs Union, Algirdas Semeta. A press conference is expected to take place after the meeting.

Administrative cooperation in tax matters: Proposal for a Council directive (ET)

The Council is expected to reach a political agreement on the proposal for a Directive on administrative cooperation in the field of taxation that was presented by the Commission on 2 February 2009 (see IP/09/201).

The proposal aims at replacing the existing EU legislation on mutual assistance, which dates back to 1977, with a new proposal which would boost Member State cooperation in the field of taxation. This proposal will help to reinforce all types of administrative co-operation, especially the automatic exchange of information between tax authorities and it will help to eliminate bank secrecy within the Single Market.

Higher education (AAT)

Ministers will have an exchange of views about efficiency and effectiveness of public expenditure on higher education in the EU.

Education is at the core of the Europe 2020 strategy and Member States recognise the strong need for highly qualified labour. The importance of higher education manifests itself in existing policy targets: several Member States have explicit policies to raise enrolment rates and have agreed on an EU-level target of 40% for the younger generation (30 to 34 years-old). Higher enrolment rates, however, are likely to increase future costs of tertiary education. In the current context of limited budgetary space this cost increase points to the importance of efficiency and effectiveness of public expenditure devoted to tertiary education.

Preparations for the G20 Ministerial Meeting on 22-23 October. Adoption of the Terms of Reference (AAT)

As the Eurogroup the day before, the Ecofin will discuss the preparations of the forthcoming G20 Finance Ministers' meeting to be held on 21-23 October in Korea, and the G20 Leaders summit in Seoul on 11-12 November. The summit will focus on the global outlook and the action plan to be adopted on the G20 Framework for Growth; the governance reform of the International Monetary Fund; the way forward on Global Financial Safety Nets; and financial regulatory reforms.

National fiscal frameworks: best practices (AAT)

The report presents the identification of common features of success in the design of national budgetary frameworks in the Netherlands, Sweden, and Austria.

Fight against tax fraud: Reverse charge VAT on mobile phones and computers (ET) (A point)

The Council is expected to reach a political agreement on the Commission's proposal to authorise Germany, Italy and Austria to apply reverse charge VAT on sales of mobile phones and computers /integrated circuits and to authorise the UK to continue do so beyond April 2011.

Earlier this year, these four Member States introduced requests for derogations to the general VAT rules in order to better fight VAT carrousel fraud in the sector of mobile phones and computers.

Taxation of the financial sector (ET)

In view of the European Council at this end of October, Commissioner Šemeta will present the Commission's Communication on Taxation of the Financial Sector that he published on 7 October (see IP/10/1298).

Working on the basis that the financial sector needs to make a fair contribution to public finances, and that governments urgently need new sources of revenue in the current economic climate, the Commission put forward its policy orientations on the options available to tax the financial sector. At global level, the Commission supports the idea of a Financial Transactions Tax (FTT), which could help fund international challenges such as development or climate change. At EU level, the Commission recommends that a Financial Activities Tax (FAT) would be the preferable option. If carefully designed and implemented, an EU FAT could generate significant revenues and help to ensure greater stability of financial markets, without posing undue risk to EU competitiveness.

Levies in the Financial Sector (CH)

In preparation of the European Council, ministers are also to discuss the issue of levies on the financial sector. The Commission believes that it is in the interests of the Single Market for national approaches to be coordinated. Forming a key element of the Commission's crisis management framework, the Commission supports the use of the proceeds of a levy to establish resolution funds that would contribute to the orderly resolution of banks that fail in the future.

To this end, following discussions with the governments of the Member States and Members of the European Parliament, the Commission anticipates to come forward with robust proposals in the spring of 2011.

Implementation of the Stability and Growth Pact (AAT)

The Council is expected to assess measures taken by Lithuania and Romania following the recommendations issued by the Council on 16 February. Both countries were put under Excessive Deficit Procedures in July 2009. The deadline for correction (i.e. to bring down their deficit to the 3% target) is 2012 for both.

Commission's assessment is that both countries are on track to comply with Council recommendations. Therefore no further action is requested to them under the EDP.

Crisis Management Framework (CH)

As part of an ongoing effort to ensure the long-term stability of the financial sector, the European Commission will present the outline of the Communication on crisis management, due for adoption by the College on 20 October. Currently there is no coordinated mechanism in the EU for tackling future banking crises. There is agreement, however, that any future crisis response should be neither fragmented across the Member States, nor burden taxpayers with the responsibility of bailing out financial institutions. The crisis management framework is thus a step in the direction towards implementing preventative and preparatory measures so that Europe can anticipate a coordinated response in any future crisis. The Communication outlines proposals that build on existing supervisory The Communication will be followed by appropriate legislative initiatives in Spring 2011. Commissioner Barnier will present a broad outline of his ideas on this.

More information:

http://ec.europa.eu/internal_market/bank/crisis_management/index_en.htm


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