By Chris Jones - 7th November 2006
EU finance ministers will meet on Tuesday to discuss a package of proposals designed to level the playing field on alcohol taxes.
The European commission is keen to see greater harmonisation of excise duty rates in a bid to prevent distortions of trade between member states.
Consumers in countries such as Finland or Sweden, which have high duty rates, increasingly buy their alcohol in neighbouring states such as Estonia, where taxes are lower.
Brussels wants to see minimum duty rates rise by 31 per cent from 1 January 2008, some 15 years after the minimum rates were first set.
Twelve member states – in particular the major wine-making countries – would need to raise their rates, since many have minimal or zero duties on wine, and would be allowed to do so over a two-year period.
But reaching an agreement is by no means certain, with some countries concerned that two years is not long enough to phase in the higher rates as it would mean some sharp increases in the cost of alcohol.
The Finnish EU presidency – which is unlikely to be affected by the duty increase as it already has some of the highest rates in the EU – has proposed extending the transitional period to three years, and making it available to every country in a bid to win approval.
There is also disagreement over which products should be covered, with some countries calling for beer to be exempted from the rules.
In a related issue, ministers will also try to reach an agreement on duty-free allowances for travellers from outside the EU.
The commission has proposed an increase in the amount and value of goods that can be bought duty free, but there are still minor disagreements over questions such as the exact ceiling that should be imposed on duty-free sales and on which products – such as coffee or tobacco – should be exempted.
The Ecofin meeting will also reopen the thorny debate over reduced rates of VAT following a request from France for permission to charge lower duty on online media.
Print media is subject to lower duty rates of across the EU, and Paris wants to extend this to internet-based media as well, a move it claims will help encourage more companies to switch to digital formats.
But with the recent fiasco over reduced rates for other services still fresh in everyone’s minds – only a last minute agreement with Poland prevented the entire reduced-rate system from collapsing at the start of the year – there is little hope of success.
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