By Chris Jones - 30th January 2006
Poland has asked for more time to take a key decision on the extension of an EU reduced VAT scheme following the deaths of 67 people in Katowice on Saturday.
The deaths occurred when the roof of a town hall collapsed under the weight of the snow. The hall was hosting a meeting of pigeon enthusiasts from around the world.
With the entire country in a state of mourning, the government in Warsaw has asked Brussels for more time to consider its position.
Poland, along with the Czech Republic and Cyprus, last week abstained from backing a new plan to extend the EU’s reduced VAT scheme until 2010. The new member states said they needed more time to assess how the scheme would affect them.
The EU has a standard minimum VAT rate of 15 per cent, but nine countries have opted to apply lower rates to certain labour intensive services, such as home repairs or hairdressing, under a pilot scheme agreed in 1999.
But the scheme has never been made permanent, and there must be consensus among all 25 member states each time a further extension is sought.
The previous scheme expired on December 31 following German opposition to an extension, leaving the nine countries in breach of EU rules. But the European commission agreed to hold off from starting legal proceedings for three weeks to allow further negotiations.
This deadline was last week extended until Sunday night at the request of the three member states. Prague and Nicosia have both since agreed to back the proposal.
But Warsaw will now make its decision on Tuesday after Karl-Heinz Grasser, the current head the Ecofin council of EU finance ministers, agreed to Poland’s request to delay a decision until after the end of the mourning period.
The ‘college’ of 25 commissioners will discuss the issue on Wednesday in the light of the Polish decision.
However, it remains unclear whether Poland will follow the two other dissenters and agree to the extension of the scheme in its current form.
Media reports before Saturday’s tragedy suggested that Warsaw was ready to dig in its heels and hold out for a better deal.
But some of the “old” member states have warned of possible reprisals if Poland fails to back the plan. Thousands of jobs could be lost if countries are forced to apply higher VAT rates, and national governments affected by the cuts would be unlikely to back Poland during any future negotiations.
Have your say...
Please enter your comments below.