The EU's council of finance ministers (Ecofin) has made progress over differences of opinion on reform of the Stability and Growth Pact, which would reduce budgetary pressure on member states to either reduce spending or increase taxes.
At their meeting in Brussels on February 17 2005 the finance ministers made progress in reducing their differences over on proposed changes to the stability pact. Some member states, such as Germany and France, are seeking greater fiscal flexibility but others, such as Austria and the Netherlands, want budgetary discipline to be upheld.
Under the stability pact, countries promise to maintain budgetary discipline and to avoid excessive deficits as a proportion of gross domestic product.
At a press conference after the meeting, Herve Gaymard, the French finance minister, told journalists that about 10 sticking points remained. Jean-Claude Juncker, Luxembourg's prime minister and Ecofin's chair, was also positive. "There are still disagreements but where there are disagreements, positions have come considerably closer together," Juncker said.
The finance ministers did however agree to amend the Mergers Directive (90/434/EEC) that provides for tax deferral in cross-border mergers and divisions of companies, asset transfers and share exchanges. The European Commission welcomed these changes, which broaden the scope of the directive to cover a wider range of companies including the new European company structure and European co-operative societies. It also ensures that the directive will apply to conversion of branches into subsidiaries as well as to partial divisions or split-offs.
The ministers were expected to discuss a Europe-wide tax on airline fuel or a surcharge on flight tickets to increase foreign aid, but it did not appear on the agenda. Juncker said that Europe had failed to achieve aid targets by normal budgetary instruments and expressed a preference for a kerosene fuel tax as an alternative means of financing. He accepted however, that the council was not united on this issue. Hans Eichel, the German finance minister, has been one of the prime movers behind the idea of the airline fuel or flight ticket tax. SC
