The European Parliament votes against Lulling report on minimum excise duties on alcohol

Strasbourg, 23 May. The Members of the European Parliament have today voted against the adoption of the report prepared by the vice-chairman of the Beer group in the European Parliament, the MEP from Luxembourg, Ms Astrid Lulling, on minimum excise duties on alcohol.

The report by Ms Astrid Lulling (EPP-ED, LU), contained two major proposals that were of great concern to the health NGOs, namely;

- The elimination of the minimum excise duties on alcohol

- A Code of Conduct establishing that those Member States levying excise duty rates above the EU average should freeze and reduce them gradually.

Eurocare welcomed the results of the voting. Andrew McNeil, Honorary Secretary said that “by treating alcohol as an ordinary economic commodity, the proposal from Ms Lulling failed to incorporate health concerns and therefore breached the Treaty's obligation to ensure a high level of human health protection in the definition and implementation of all Community policies and activities”. McNeil added that “evidence shows that price and tax measures are an effective policy option in reducing the harm done by alcohol and young people are particularly sensitive to price. Member States who have adopted high excise duties, have done so in the interest of public health rather than economic benefit. The measures proposed in the Lulling report would only penalize and increase the pressure on those Member States that have chosen to regulate alcohol taxes as a means of protecting citizen welfare.”

Following its rejection by the Plenary, the report has gone back to the Economic Committee of the Parliament (ECON Committee). The Committee will vote on the new amendments tabled to the report on the 27th of June. The text will be voted in plenary on July.

As is usually the case for taxation policy, parliament's view is consultative and any decision on whether to increase, reduce or altogether remove the minimum levels of duty will require unanimous agreement between the Member States in the Council.

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:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1165&format=HTML&aged=0&language=EN&guiLanguage=en

In 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

Documents:

Report from the ECON Committee and amendments:

http://www.europarl.europa.eu/sce/server/internet/amend_motions_texts/sce_amend_motions_texts_main_01.jsp?amend_text_type=R

Legislative observatory

http://www.europarl.europa.eu/oeil/file.jsp?id=5382652

Results of the vote on 23 May: