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The European Parliament calls for an abolition of mandatory minimum excise duties on alcohol
Brussels, 11 April. MEPs in the Economics Committee say that minimum levels of duty for alcoholic drinks should be scrapped.
In 1992, the then 12 EU Member States unanimously agreed to set minimum levels for excise duties on beer, spirits and other alcoholic drinks apart from wine. The aim was to reduce the market distortions caused by widely differing excise levels. The Commission is now proposing that these minimum levels (which were set as absolute amounts, not as a percentage) should be increased in line with inflation since 1992 (see background information below).
The MEPs (Members of the European Parliament) in the ECON Committee, however, in a report adopted on 11 April, do no agree with the idea put forward by the commission that in order to compensate for the fall in the real value of the Community minimum excise duties is necessary to increase them in line with inflation and argue that the minimum levels have failed to achieve the desired convergence in excise duties, and that they should therefore be scrapped.
According to the members in this Committee the most effective way to achieve convergence of excise duties on alcoholic beverages is by tax competition which can in turn be best promoted by free, unrestricted and, indeed, facilitated movement of such products across the internal borders of the European Union, with taxation levied only at the point of purchase.
Instead, the MEPs in the Committee propose that Member States “shall lay down a Code of Conduct no later than 31 December 2009 in which the Member States levying excise duty rates above the EU average should take measures with a view to freezing their excise duties and reducing them gradually, depending on the status of their economic cycles.
Member States levying excise duties falling short of the EU average should not decrease the excise duty rates based on the measures of 1 January 2007 but should consider raising their rates by an appropriate amount, depending on the status of their economic cycles”.
The report which was prepared by Ms Astrid Lulling, a Luxembourg MEP from the EPP and vice-chairman of the Beer Intergroup in the Parliament, was adopted on Wednesday 11 April, with 19 vote in favour, 15 against and 2 abstentions.
The report is now due for consideration at the Brussels plenary session of 9-10 May 2007. As is usually the case for taxation policy, Parliament's view is consultative and any decision on whether to increase, reduce or scrap the minimum levels of duty will require unanimous agreement between the Member States in the Council.
Commission's proposal
EP Draft Report: Rapporteur Astrid Lulling
http://www.europarl.europa.eu/meetdocs/2004_2009/documents/pr/651/651845/651845en.pdf
Proposed amendments to the draft report:
http://www.europarl.europa.eu/meetdocs/2004_2009/documents/am/657/657443/657443en.pdf
The results of the voting in the ECON Committee:
http://www.eurocare.org/pdf/newsletters/lulling.pdf
The report adopted by the ECON Committee should be soon available on: http://www.europarl.europa.eu/activities/expert/committees/reports.do?committee=2351&language=EN
Procedure file: http://www.europarl.europa.eu/oeil/file.jsp?id=5382652
Background information:
On 8 September 2006, the Commission adopted a proposal to update the existing Directive 92/84/EEC on the approximation of the rates of excise duty on alcohol and alcoholic beverages by increasing the minimum rates in order to take account of inflation and restore their real value agreed by Council in 1992. Based on Eurostat data the total inflation rate for the period between 1993 and 2006 has been estimated by the Commission at around 31%.
In fact, the majority of Member States are unaffected by this proposal as their national rates already exceed the proposed new minimum rates. Although the inflation rate is 31%, the actual impact on prices in the countries affected by the decision will be minimal, for example, for beer, the biggest required increase in national excise duty would be of the order of € 0.01 (one eurocent) on half a litre of beer.
Commission press release:
On November last year, the EU Finance Ministers examined the Commission's proposed adjustments but failed to reach an agreement so they decided to delay the decision and invited the Commission to carry out a comprehensive study of the taxation of alcohol and alcoholic beverages, including trends in competitive positions and in levels of taxes and prices.
The results of that study were to be presented to the Council during the first half of 2007, with a view to facilitating further Council decision-making as regards alcohol taxation.
EU Council press release:
http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ecofin/91899.pdf