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krystian
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 EU Still Hopes Poland Will Join VAT Deal
European Commission Still Hopes Poland Will Join VAT Deal
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BRUSSELS, Belgium (AP) -- The European Commission said Tuesday it still hoped Poland would join an agreement on sales tax exemptions before a midnight deadline to prevent ramping up rates in nine other EU countries.
Poland said Monday it would not sign the compromise extending the reduced VAT rates until the end of 2010, making it the only country blocking a deal after the Czech Republic and Cyprus backed down on Sunday. The compromise needs the unanimous approval of 25 EU governments to come into effect.
A Polish rejection would mean nine other countries would have to bring reduced rates for services such as hairdressing and home repairs up to the EU minimum standard rate of 15 percent, the commission said.
The issue is urgent because value-added tax waivers expired at the end of 2005 and the commission is legally obliged to sue the countries that now use a lower rate. It said it would make a decision on legal action Wednesday.
"If tonight there is no agreement, then the commission will ask the member states concerned to apply the law that is," EU spokesman Johannes Laitenberger said.
"If this doesn't happen within a reasonable delay then the commission will have to start infringement proceedings. There has to be a reasonable delay because legislation needs to be changed at the national level and that you cannot do overnight.
The Poles insist that they want to keep a lower VAT tax rate for new home construction beyond 2008. Polish Finance Minister Zyta Gilowska said the decision was based on "the good of Polish citizens and the need to protect the interests of our country."
The commission had so far only seen press reports and a notice on the Polish finance ministry web site that Poland was planning to say no, EU spokeswoman Maria Assimakopoulou said.
She said the commission had written to Gilowska to suggest how Polish concerns could be put to rest, explaining that the agreement only covered services, not housing.
"We believe there is still scope for explanations and understanding," she said. "We still hope that Poland, at the end of the day, will see this agreement positively."
"If we have this agreement, everybody is going to gain including Poland and if we don't have this agreement everybody is going to lose including Poland."
The EU small business lobby UEAPME said a failure to strike a deal would mean instant tax hikes of up to 14 percent, raising prices for services and threatening up to 200,000 jobs across Europe.
France, Britain, Belgium, Greece, Spain, Italy, Luxembourg, the Netherlands and Portugal have low tax rates for a range of labor-intensive services, and they need the support of all their EU colleagues to extend or add to the allowed list. The compromise -- agreed on last week after years of debate -- allows other countries introduce the VAT waivers before the end of March.
The lower rates were introduced as a short-term measure in 1999 to encourage workers who often avoid tax -- such as house cleaners and carers -- to come in from the black economy.
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 Posté le: Mer Fév 01, 2006 10:36 am
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