Paolo Bartolozzi (PPE-DE). – (IT) Madam President, ladies and gentlemen, the European Parliament has always taken a close interest in changes to VAT, whether for the purpose of harmonising rates among Member States, adjusting VAT to the economic climate, or taking account of temporary exemptions granted to new members of the European Union. Although we have taken an overall view, our approach has until now necessarily been characterised by a need for flexibility in applying reduced rates, either to take account of the specific nature of manufacturing sectors, or for economic and social reasons.

The proposal in question is, however, aimed at extending the application of reduced VAT rates to a variety of services, including labour-intensive services, restaurants, locally-supplied services, construction and transfer of housing, and services provided for the disadvantaged.

Far from seeking to harmonise VAT in all Member States, the directive in question, in accordance with the principle of subsidiarity, intends to ensure equal opportunities for all Member States, while allowing them to set their own reduced rates. As a consequence, consumers will be led to transfer certain activities carried out within the local or underground economy to the formal economy, thereby encouraging economic growth without distorting the operation of the internal market. It should, however, be remembered that the majority of the services in question can already benefit from a reduced rate, if only in a limited number of Member States and for a limited period.

The debate remains open, though, on the application of reduced rates for environmental protection and energy saving, on which the Commission is to provide specific assessments, given the importance of these sectors to the EU economy.