EU Approves Enforcement Cooperation on Value Added Tax

On June 13, 2002, the European Parliament voted to approve a European Union initiative supporting interstate cooperation between national tax officials, in spite of opposition from persons who view the measure as eroding privacy and increasing a federal-type tax authority. The Parliament approved a $53 million extension through 2007 of the 1998-2002 FISCALIS program, which was instituted primarily to support the effort of national tax officials to tune the EU system of value-added tax (VAT) on goods and services. VAT requires extensive cross-border collaboration between tax and customs administrations across the 15 EU member states, for example in the information exchanges that allow states to control exempt intra-EU supplies of goods. Political groups opposed to deeper EU integration criticized the new program?s expanded scope that permits FISCALIS ?to raise awareness of [EU] policies in the field of direct taxation and provide support for pooling experiences, information exchange and other administrative co-operation.? The Council of Ministers must now review the parliamentary changes to the original Commission draft. If it does not agree with those changes, the two bodies may have to settle their differences through formal negotiations. Some Parliamentarians objected. Conservative Theresa Villiers characterized the expanded scope as EU encroachment into national policies on income and capital taxation by way of ?small, technical steps."