This letter is in response to your Committee's request for further information with regard to the Commission's proposal for International Tax Dialogue.

  As presented in the EM of July 07 (12010/07) the Government objected strongly to the Commission's proposal based on the following main points:

I. The potential extension of Community legal competence in the area of tax;

II. The duplication of effort with the existing members of the International Tax Dialogue; and

III. The marginal benefit given the costs attached.

  The Government is content with the representation the UK enjoys by the existing ITD participating members such as OECD, World Bank and IMF. We consider there to be no additional value in being represented by another institution (i.e. EU Commission). In addition, the estimated budget of € 130 000 (£ 87,272) assigned to the Commission's membership at the ITD does not correspond to the minimal benefits it would bring to the UK and the potential risk to the national competence in the area of tax. In our Memorandum we referred to the Commission as the potentially "fourth participating organisation" in light of World Bank, IMF and OECD being the other three organisations of the similar status and representing power. It is not known to us from the Commission's proposal whether the Commission initiated the decision to join, or whether it was extended an invitation by the ITD.

  As you may be aware from my letter to the Chair of HOC European Scrutiny Committee the Commission's proposal was discussed at the Council Tax Working Group on 19 September where the UK Government presented our arguments in opposition to the Commission's proposal. We received significant support from the majority of other Member States, all strongly opposing this proposal. This led the Presidency to conclude that there was no merit in further discussion of the proposal.

  While there are no plans by the current Presidency to include this on their Presidency agenda, I can confirm that the Government has no intention of supporting this proposal should it come up for discussion again in the future. Should, however, any of the existing conditions of the proposal change in the future I would write to your Committee in light of the proposed changes and the Government's initial response.

  I hope this letter responds satisfactorily to your request.

15 December 2007